CALGARY, Alberta (Reuters) - Canadian Natural Resources Ltd (CNQ.TO), the country’s No. 1 independent oil producer, warned on Wednesday about the risks of adjusting Alberta’s oil and gas royalties regime and said the province needed to remain competitive.
Alberta, home to Canada’s vast oil sands and the largest source of U.S. crude imports, elected a left-leaning NDP government in May that pledged to raise corporate taxes and review how much producers pay in royalties to the province.
The prospect of a royalty review has unsettled many producers amid concerns uncertainty about extra costs may prompt a capital flight from Alberta’s oil industry, which is already reeling from low global crude prices.
Last month Canadian Natural delayed an institutional investor open house, citing lack of clarity about government policies.
Speaking on a conference call outlining Canadian Natural’s strategy, company President Steve Laut said the industry was worried about the prospect of increased taxation and uncertainty about royalty and regulatory burdens going forward.
He cited an Alberta royalty review in 2007 and a tax hike in the United Kingdom in 2011 as examples of regulatory change that have had a negative effect on the industry.
Laut said increased taxation in the UK North Sea led to stifled capital investment, declining production, less revenue for government and job losses.
“The industry, as you would expect, is concerned as we see these changes in the past ... ended up being lose-lose situations for both the industry and the governments,” Laut said. “Adjusting the royalty, taxation and regulatory burdens is complex, and the risk of getting it wrong is high.”
However, Laut also said he assumed the royalty, regulatory and environmental burdens imposed by the new government would be reasonable.
“We believe the Alberta government understands this complexity and wants a strong and healthy oil and gas industry. We look forward to working together with the government during this period of review,” he added.
Editing by Meredith Mazzilli and Alan Crosby