Natural gas explorer Metgasco Limited announced Friday that it welcomes the New South Wales (NSW) Government’s recognition that gas supplies are essential to the future of NSW and that the gas industry in the Australian state can be managed safely.
Metgasco is, however, concerned about the repeated changes in regulation and policy since the current Government came to office and the uncertainty the latest announcement has created.
In March 2011 the NSW Government effectively put a hold on the industry while it created new regulations, which included a Strategic Land Use Policy and a myriad of other regulations. In September 2012 it announced that the industry had the toughest standards in the world and gave the green light for exploration and development to proceed. It correspondingly renewed exploration licenses and announced the approval of Metgasco’s first production license (just south of Casino).
Since then it has taken a number of actions which have had the effect of stifling the industry.
The new policy announcement does not sufficiently clarify the business and regulatory environment for the gas industry in NSW. Business needs a degree of certainty to justify expenditure. We now have new rules and regulatory responsibilities, many of which will not be defined until well into 2015, uncertainty about the rules for land holder compensation and some indication that the royalty regime might change to encourage exploration.
Metgasco has invested approximately $104.4 million (AUD 120 million) over the past ten years exploring for natural gas in NSW and has established the second largest gas resource in the state. It did so with the expectation that its exploration rights would be respected.
Metgasco is seeking a meeting with the Minister for Resources and Energy to clarify the impact of the new policy on the potential of the significant gas resource in the Northern Rivers region.
It is important that the NSW Government sends a message to all investors that NSW is a place in which investment can be made with confidence.
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