Western province's regulations raising concerns among investors
CALGARY—The oil and gas sector is losing confidence in Alberta as a safe place to put its money, according to a new Fraser Institute survey of senior energy sector executives.
The think tank’s 2015 Global Petroleum Survey looked at 126 jurisdictions around the world, assessing their barriers to investment such as high taxes, costly regulatory obligations and uncertainty over environmental regulations.
“Since the 2015 provincial election in Alberta, the new government has implemented a number of oil and gas sector policies that may deter investment and hinder the economy,” Kenneth Green, senior director of the Fraser Institute’s Centre for Natural Resources and co-author of the report, said.
“Initiatives such as an increase to the corporate income tax, changes to environmental policies and a review of the province’s energy royalties add additional costs and uncertainty to an oil and gas industry already hampered by declining prices,” he added.
Of the 14 jurisdictions around the world with large petroleum reserves, Texas, United Arab Emirates, Alberta, Qatar, and Kuwait rank first.
Though the survey shows investors still rank Alberta highly, the survey reveals perceptions about the province are changing, the Fraser Institute said.
Alberta’s standing in the Policy Perception Index, for example, which measures how policy deters investment, fell to 38th overall from 16th in 2014. Meanwhile, 39 per cent of respondents said ‘fiscal terms,’ a measure that includes royalty regimes, were a deterrent to investment, while only 14 per cent said the same thing in 2014.
“It’s clear that, in Alberta, the recent oil and gas policy changes have helped to form an economic environment fraught with uncertainty and risk,” Green said.
Of the Canadian provinces included in the survey, oil and gas investors felt the most certain about investments made in Saskatchewan.