global petroleum survey

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Global Petroleum Survey 2016

This report presents the results of the Fraser Institute’s 10th annual survey of petroleum industry executives and managers regarding barriers to investment in oil and gas exploration and production facilities in various jurisdictions around the globe. The survey responses have been tallied to rank provinces, states, other geographical regions (e.g. offshore areas), and countries according to the extent of such barriers. Those barriers, as assessed by the survey respondents, include high tax rates, costly regulatory obligations, uncertainty over environmental regulations and the interpretation and administration of regulations governing the “upstream” petroleum industry, and concerns with regard to the political stability and security of personnel and equipment.

A total of 381 respondents participated in the survey this year, providing sufficient data to evaluate 96 jurisdictions, which hold 66 percent of proved global oil and gas reserves and account for 75 percent of global oil and gas production.

The evaluated jurisdictions are assigned scores on each of 16 questions pertaining to factors known to affect investment decisions. These scores are then used to generate a “Policy Perception Index” for each jurisdiction that reflects the perceived extent of the barriers to investment. The jurisdictions are then sorted into clusters based on the size of their proved reserves, allowing for an apples-to-apples policy perception comparison of the resources that are available for commercialization.

Of the 12 jurisdictions with the largest petroleum reserves, Texas, United Arab Emirates, Qatar, Alberta, and China are the five most likely to attract, or least likely to deter, investment. The five large-reserve jurisdictions least likely to attract investment on the basis of their Policy Perception Index scores (Venezuela, Libya, Russia, Indonesia, and Nigeria) account for 45 percent of the proved oil and gas reserves of all the jurisdictions included in the survey. Alberta is the only Canadian jurisdiction in the group of jurisdictions with large reserve holdings.

In the group of 36 jurisdictions with medium-sized reserves, the 10 that are the most attractive for investment are: Oklahoma, Wyoming, North Dakota, Norway—North Sea, the Netherlands, Arkansas, Norway—Other, Louisiana, United Kingdom—North Sea, and West Virginia. The only Canadian jurisdictions in this group are Newfoundland & Labrador (12th of 36) and British Columbia (18th of 36).

Of the 45 jurisdictions with relatively small proved oil and gas reserves, the top 10 performers are Kansas, Saskatchewan, Mississippi, Utah, Montana, Alabama, United Kingdom—Other, Manitoba, New Zealand, and Morocco. Nova Scotia, Yukon, and the Northwest Territories rank near the middle to the bottom of the small-reserve-holder group. New Brunswick was the least attractive jurisdiction in this group due to its poor Policy Perception Index scores on a number of survey questions.

When the attractiveness for investment is considered independently from the reserve size of jurisdictions (historically the primary focus of this survey), we find that jurisdictions with first quintile Policy Perception Index scores, suggesting that obstacles to investment are lower than in all other jurisdictions assessed by the survey, are almost all located in Canada, the United States, and Europe. According to this year’s survey, the 10 most attractive jurisdictions for investment worldwide are Oklahoma, Texas, Kansas, Saskatchewan, Wyoming, North Dakota, Norway—North Sea, Mississippi, Utah, and Montana. All but three of these jurisdictions—Wyoming, Utah, and Montana—ranked in the worldwide top 10 in the 2015 survey.

The 10 jurisdictions that are least attractive for investment are (starting with the worst): Venezuela, Quebec, Libya, Bolivia, New Brunswick, California, New South Wales, Ecuador, Ukraine, and Russia.

Our analysis of the 2016 petroleum survey results indicates that the extent of negative sentiment regarding key factors driving petroleum investment decisions has increased somewhat in many of the world’s regions. The United States continues to remain as the most attractive region for investment, followed by Australia, which moved ahead of Canada this year. Canada’s fall to the third most attractive region in the world for investment is reflective of Alberta’s continued deterioration, as investors continue to view the province as less attractive for investment.

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pipelines or policies

While an analysis of the share prices of firms show that savvy investors have already “priced in” many of the concerns about oil transport and access to outside markets, the Fraser Institute’s annual Global Petroleum Survey shows that investor confidence in Alberta is taking a serious hit.

The survey’s Policy Perception Index measures the extent of policy-related investment barriers within each jurisdiction. The higher the score, the more negative the sentiment on the part of respondents, indicating that they regard the jurisdiction in question as relatively unattractive for investment. Alberta’s score deteriorated from a value of 26.6 in 2014 to 34.2 in 2015, and its global rank as a desirable location for investment fell to 38th (out of 126) in 2015, down from 16th (out of 156) in 2014.

Areas such as political stability, fiscal terms, uncertainty concerning protected areas, and taxation experienced large negative shifts, indicating that more investors are viewing these areas as barriers to investment in Alberta.

During Alberta’s last royalty review, when investors also downgraded Alberta’s ratings in the Global Petroleum Survey, exploration and development spending in Alberta declined, while neighboring Saskatchewan and British Columbia saw increases in investment.

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Alberta’s new government has implemented, or plans to implement, many policy changes that will affect the oil and gas sector. Some of these changes include increases to the corporate income tax (CIT), increases in the carbon levy, and a panel review of the province’s oil and gas royalties and climate change policies.

The 2015 edition of the Global Petroleum Survey was conducted from May 29, 2015 to July 31, 2015, presenting a unique opportunity to assess how Alberta’s policy changes have affected investor confidence. 

Alberta experienced a large negative shift from 2014 to 2015 in the Global Petroleum Survey. On the Policy Perception Index, a comprehensive measure of the extent of policy-related investment barriers within each jurisdiction, where a high score reflects negative sentiment on the part of respondents and indicates that they regard the jurisdiction in question as relatively unattractive for investment, Alberta’s score deteriorated from a value of 26.57 in 2014 to 34.21 in 2015. The province’s rank in 2014 was 16th (of 156 jurisdictions), deteriorating to 38th (of 126) in 2015.

The investment driver that experienced the largest shift in negative sentiment from 2014 to 2015 was political stability. In 2014, only 5% of respondents viewed political stability as a deterrent to investment; that increased to 51% of respondents in 2015.

Another large negative shift was in the fiscal terms policy category, which includes the royalty framework. In 2014, only 14% of Alberta’s respondents found this factor to be a deterrent to investment; that rose to 39% in 2015.

These negative shifts may not bode well for Alberta considering that the province’s immediate geographical competitors are perceived to be either attractive jurisdictions to invest in, or are improving.

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Global Petroleum Survey 2015

This report presents the results of the Fraser Institute’s 9th annual survey of petroleum industry executives and managers regarding barriers to investment in oil and gas exploration and production facilities in various jurisdictions around the globe. The survey responses have been tallied to rank provinces, states, other geographical regions (e.g. offshore areas) and countries according to the extent of such barriers. Those barriers, as identified by the survey respondents, include high tax rates, costly regulatory obligations, uncertainty over environmental regulations and the interpretation and administration of regulations governing the “upstream” petroleum industry, and concerns with regard to political stability and security of personnel and equipment.

A total of 439 respondents participated in the survey this year, providing sufficient data to evaluate 126 jurisdictions.

The jurisdictions were assigned scores with respect to each of 16 questions pertaining to factors known to affect investment decisions. The scores are based on the proportion of negative responses a jurisdiction received with regard to each question. The greater the proportion of negative responses for a jurisdiction, the greater were its perceived investment barriers and, therefore, the lower its ranking. This ranking is used to generate a Policy Perception Index. Jurisdictions are then sorted into clusters based on the size of their proved reserves allowing for an apples-to-apples comparison of policy perception in the context of available reserves.

Of 14 jurisdictions with large petroleum reserves, the five that rank as most attractive/least deterrent to investment are Texas, United Arab Emirates, Alberta, Qatar, and Kuwait. The five least attractive of the large-reserve jurisdictions for investment on the basis of their Policy Perception Index scores (Libya, Venezuela, Russia—Other, Iran, and Iraq) account for over half of the proved oil and gas reserves all the jurisdictions included in the survey. Alberta is the only Canadian jurisdiction with large reserve holdings.

In the group of 38 jurisdictions with medium-sized reserves, the 10 most attractive jurisdictions are: Oklahoma, North Dakota, Norway—North Sea, West Virginia, Louisiana, Norway—Other, Wyoming, US Offshore—Gulf of Mexico, United Kingdom—North Sea, and Pennsylvania. Syria, Ecuador, Ukraine, Indonesia, and Yemen, appear to pose the greatest barriers to upstream investment among medium reserve-size holders.

The only Canadian jurisdiction in this group is British Columbia which ranks 17th (of 38).

Of 66 jurisdictions with relatively small proved oil and gas reserves, the top 10 performers are Netherlands—Offshore, Alabama, Mississippi, Kansas, Arkansas, Saskatchewan, Manitoba, South Australia, New Zealand, and Montana. Those in this group deemed the least attractive for investment on the basis of poor Policy Perception Index scores are: US Offshore—Pacific, Bangladesh, Timor Gap (JPDA), Myanmar, and Argentina—Mendoza. Ontario, Nova Scotia, New Brunswick, Yukon and the Northwest Territories each rank near the middle of the small reserve holder group.

When considering policy independently from the size of jurisdictions’ reserves, historically the primary focus of this survey, we find that the jurisdictions with Policy Perception Index scores in the first quintile, suggesting that obstacles to investment are lower than in all other jurisdictions assessed by the survey, are all located in Canada, the United States, and Europe. According to this year’s survey, the 10 most attractive jurisdictions for investment worldwide are Netherlands—Offshore, Alabama, Oklahoma, Texas, Mississippi, Kansas, Arkansas, Saskatchewan, North Dakota, and Manitoba. All of these jurisdictions were among last year’s top 10 most attractive jurisdictions with the exception of Netherlands—Offshore. The only jurisdiction displaced from the top 10 was Wyoming.

The 10 least attractive jurisdictions for investment (starting with the worst) are: Libya, Venezuela, Syria, Ecuador, US Offshore—Pacific, Russia—Other, Bangladesh, Quebec, Ukraine, and Timor Gap (JPDA).

Analysis of the 2015 results indicates that the extent of negative sentiment with regard to factors driving petroleum investment decisions (disregarding the extent of proved oil and gas reserve holdings) decreased in most world regions. The United States continues to remain as the most attractive region in the world for investment, followed by Canada, which surpassed Australia to become the second most attractive region in the world for upstream petroleum investment.

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The Fraser Institute’s 8th annual survey of petroleum industry executives shows that barriers to investment in oil and gas exploration and production facilities in various jurisdictions around the globe include high tax rates, costly regulatory obligations, uncertainty over environmental regulations and the interpretation and administration of regulations, and concerns over political stability and security of personnel and equipment. A total of 710 respondents participated in the survey, providing sufficient data to evaluate 156 jurisdictions.

A Policy Perception Index captures investors’ perceptions on conditions affecting investment decisions and provides a comprehensive assessment of each jurisdiction. When considering policy independently from the size of a jurisdiction’s reserves, the 10 least attractive jurisdictions for investment (starting with the worst) are Venezuela, Bolivia, Ecuador, Iran, Russia—Eastern Siberia, Russia—Off shore Arctic, Iraq, Uzbekistan, Democratic Republic of the Congo (Kinshasa), and Turkmenistan. The 10 most attractive jurisdictions for investment worldwide are Oklahoma, Mississippi, Saskatchewan, Arkansas, Manitoba, Alabama, Kansas, Texas, North Dakota, and Wyoming.

Five jurisdictions saw considerable improvements over last year: French Guiana, Uruguay, Suriname, Guyana, and Romania. However, a substantial number of jurisdictions saw their barriers to investment increase significantly over the past year. Forty-one of the 156 jurisdictions had their scores deteriorate by 10 points or more. The biggest drops were for Nova Scotia, Yukon, Georgia (the country), Spain—Offshore, Kuwait, South Africa, Turkey, Spain—Onshore, Lebanon, Egypt, Tanzania, and Mali.

As in previous surveys, investors indicate that they continue to turn away from jurisdictions with onerous fiscal regimes, political instability, and land claim disputes. Similarly, investors prefer to avoid jurisdictions with costly, time-consuming uncertain regulations. Other factors being equal, competitive tax and regulatory regimes can attract investment and thus generate substantial economic benefits.

Saskatchewan has best policy in Canada for oil and gas investment but Alberta earns top spot when proven reserves taken into account

CALGARY, AB—Saskatchewan may have the best policies in Canada for attracting oil and gas investment but when proven reserves are included, Alberta is once again top dog among all Canadian provinces for investment and number three in the world, according to the Fraser Institute’s annual Global Petroleum Survey.

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This report presents the results of the Fraser Institute’s 7th annual survey of petroleum industry executives and managers regarding barriers to investment in oil and gas exploration and production facilities in various jurisdictions around the globe. Those barriers include high tax rates, costly regulatory obligations, uncertainty over environmental regulations and the interpretation and administration of regulations governing the “upstream” petroleum industry, and concerns over political stability and security of personnel and equipment. A total of 864 respondents participated in the survey, providing sufficient data to evaluate 157 jurisdictions.

A Policy Perception Index captures investors’ perceptions on conditions affecting investment decisions and provides a comprehensive assessment of each jurisdiction. On this index, the 10 least attractive jurisdictions for investment (worst first) are Venezuela, Ecuador, Iran, Bolivia, Russia—Offshore Arctic, Uzbekistan, Russia—Eastern Siberia, South Sudan, Iraq, and Russia—Other (i.e., all of Russia except for Offshore Arctic, Offshore Sakhalin, and Eastern Siberia). This index does not factor in a jurisdiction’s known petroleum reserves.

The jurisdictions with the best Policy Perception Index scores (scores that suggest obstacles to investment are lower than in all other jurisdictions), are all located in Canada, the United States, and Europe. According to this year’s survey, the 10 most attractive jurisdictions for investment worldwide are Oklahoma, Mississippi, Saskatchewan, Texas, Arkansas, Kansas, Alabama, North Dakota, Manitoba, and Netherlands—North Sea.

A new section has been added to this year’s report to examine how jurisdictions compare on the Policy Perception Index when their proved oil and gas reserves are considered. Jurisdictions with proved reserves have been split into three tiers based on their holdings of the worlds’ proved oil and gas reserves: Tier One each hold at least 1 percent; Tier Two hold between 0.1 and 1 percent; and Tier Three hold up to 0.1 percent. Twenty-seven of the jurisdictions assessed hold at least 1 percent each of the worlds’ proved oil and gas reserves, ranging from India’s 13.9 billion barrels of oil equivalent (Bboe) to Iran’s 369.6 Bboe. Together, the jurisdictions in this Tier One group account for 92 percent of global reserves. The nine Tier One jurisdictions that stand out as the least attractive for investment on the basis of their Policy Perception Index scores (Venezuela, Iran, the four Russian regions, Iraq, Libya, and Kazakhstan) account for more than half of the world’s proved oil and reserves. The seven large-reserve holders that rank highest on this measure are Texas, Qatar, Alberta, United Arab Emirates, Norway—North Sea, Australia—Offshore, and Kuwait.

Barriers to investment have increased in a number of jurisdictions over the past year, particularly in New Mexico, Michigan, Colorado, Cyprus, Hungary, Guyana, France, Romania, California, Bulgaria, New York, Guatemala, Quebec, and Kyrgyzstan. However, 14 jurisdictions improved their relative attractiveness for investment. Most improved were Chile, Jordan, Mali, and Pakistan.

As in previous surveys, investors indicate that they continue to turn away from jurisdictions with onerous fiscal regimes, political instability, and land claim disputes. Similarly, investors prefer to avoid jurisdictions with costly, time-consuming uncertain regulations. Other factors being equal, competitive tax and regulatory regimes can attract investment and thus generate substantial economic benefits.

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