IMPLICATIONS OF FOREIGN INVESTMENT POLICY FOR PETROLEUM DEVELOPMENT IN AUSTRALIA

Abstract

In recent years the proportion of petroleum exploration outlays made by Australian investors has risen significantly, though this trend may now be receiving a setback owing to the recession.

Budgeted exploration outlays for 1981 by foreign interests and naturalised and naturalising companies accounted for 59 percent of total expected petroleum exploration outlays. In comparison, the foreign participation rate was 57 percent in 1980, 72 percent in 1979, and 74 percent in 1978.

There has been some comment that, because of the difficulties Australian explorers face raising capital under present sharemarket conditions, a rise in foreign participation in Australian petroleum resources could result. It has been suggested this could destroy community acceptance of foreign investment which could rebound on future investment levels. It is claimed that lower Australian participation in exploration would also result in Australians being required to pay a higher entry price to ventures later and that rigid insistence on the Government's Australian equity guidelines being met at development could slow the pace of resource development down to what Australians can afford to pay for.

There can be problems from time to time in mobilising sufficient risk capital to maintain levels of exploration activity in Australia. Yet there seems little merit in trying to predict a long-run trend in foreign/Australian participation from a short-term relationship between foreign and domestic investment.

Foreign investment plays a significant role in the petroleum industry. The Government's foreign investment policy aims to maximise the benefits from this investment while providing adequate opportunities for Australian participation.