Territory Stories

Budget Paper No5 Northern Territory Economy 1998/99



Budget Paper No5 Northern Territory Economy 1998/99

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Tabled Paper 382


Tabled papers for 8th Assembly 1997 - 2001; Tabled papers; ParliamentNT




Tabled by Michael Reed


Made available by the Legislative Assembly of the Northern Territory under Standing Order 240. Where copyright subsists with a third party it remains with the original owner and permission may be required to reuse the material.




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BENEFITS TO THE TERRITORY The major economic benefits generated by the mining industry for the Territory include regional development, employment, wages, the local purchase of goods and services and royalties. Several initiatives to improve the benefits flowing to the Territory from the mining sector began in 1997. One of these initiatives was the formation of the Northern Australia Oil and Gas Taskforce in late 1997. The Taskforce is a government/industry initiative supported by the Department of Mines and Energy and the Department of Asian Relations, Trade and Industry. The primary aim of the taskforce is to facilitate commercial benefits to Darwin, and to maximise flow-on effects to local industry and businesses from offshore oil and gas operations. It is estimated that some 15% of offshore exploration and 50% of offshore production expenditures undertaken in 1997 remained in the Territory. For the period 1996 to 1998 this proportion amounted to $210 million remaining in the Territory. The taskforce also identified several market opportunities that presently exist in servicing offshore facilities. Many of these gaps could realistically be filled by local suppliers. In October 1997, a consortium was selected to develop an offshore supply and service base adjacent to East Arm Port. The $20 million base forms an important component of the Governments ambition to attract new technology and capital investment, and to supply and service operations in the Timor Sea. Such investment should enable Darwin to gain a greater share of the offshore industrys expenditures and in doing so become a world class service centre for the region. Presently Native Title issues and an Aboriginal land claim covering Darwin Harbour have delayed construction of the project. Other benefits flowing from the offshore oil and gas sector include major work undertaken in Darwin. Work carried out on drilling rigs in Darwin in 1997 included the installation of a new crane on the Ocean Bounty, a major audit on the Ocean Epoch and maintenance work on the Sedco 703. The capital cost of a new drilling rig is in the vicinity of $300 million, while leasing costs are approximately $200 000 per day. To maximise local benefits, the Northern Territory Local Content Policy was launched in June 1997. The aim of the policy is to ensure that local businesses have an opportunity to bid for work on resource development projects, particularly where the Northern Territory Government has facilitated the development. Currently this policy applies only to onshore operations, as all existing offshore operations are outside the Territorys administrative responsibility. To maximise benefits from existing onshore operations the Local Content Working Group was established in 1997. The Group is coordinating the development and implementation of strategies and programs to maximise the benefits to Territory businesses and the local economy. The Northern Territory share of goods and services consumed by the onshore mining industry is significant and increasing. In 1997, 55% of onshore mineral and petroleum operations expenditure was Territory sourced. Expenditure in the Northern Territory for 1996-97 was reported at $364 million for onshore operations, up 21.7% from $299 million in 1995-96. In terms of local content and benefits to the Territory, onshore projects tend to provide greater benefits to the Territory economy than offshore projects. For this reason, the Jabiluka uranium project is the most important planned mining development for the Territory economy. The establishment of other new mines and the large volume delivery of Timor Sea natural gas to Darwin 45 Mining

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