Newfoundland and Labrador is considered by petroleum industry experts as the worst province in Canada for investment in oil and gas exploration and development, according to the first global survey of upstream petroleum companies released today by the Fraser Institute.

The Global Petroleum Survey 2007 ranks Newfoundland and Labrador in the same company as Russia, Iran, Pakistan, and Cuba as areas with policies that discourage investment in oil and gas exploration and development.

“Survey respondents were clear that the dispute between the government of Newfoundland and Labrador and companies looking to develop the Hebron field is not encouraging investment. They were especially critical of the government’s desire to have an equity position in the Hebron development,” said Gerry Angevine, senior economist with the Fraser Institute’s Centre for Energy Policy Studies and lead author of the survey.

Provincial taxation policies and a lack of available skilled labour were also cited as negative factors affecting Newfoundland and Labrador’s ranking, he added.

Saskatchewan and Alberta were rated as the two provinces with policies most encouraging for investment. Colorado and Wyoming were the top two U.S. states. Malaysia, Romania, Qatar, and Thailand were rated as best locations overall for petroleum investment.

“Surprisingly, the survey showed Saskatchewan is seen as a more favourable province for investment than Alberta. And the survey was conducted before the Alberta Royalty Review panel released its report suggesting Alberta should raise royalties,” Angevine said.

“Although Saskatchewan’s tax policies were viewed more negatively than Alberta’s, Saskatchewan got higher marks for labour availability and other factors, including the cost of regulatory compliance.”

Modelled after the popular Fraser Institute Survey of Mining Companies, the Global Petroleum Survey 2007 is designed to help measure and rank the investment climate of various oil and gas producing regions.

The survey results are used to rank jurisdictions according to the barriers to investment posed by existing policies and institutional arrangements. This is done through the use of a number of composite indices, which measure responses to survey questions pertaining to the impact on investment of fiscal terms (royalties and licensing agreements), taxation, the local price of natural gas, the cost of regulatory compliance, regulatory uncertainty, environmental regulations, local processing requirements, trade and labour regulations, local public infrastructure, business infrastructure, quality of the geological database, labour availability, native land claims, political stability, and security concerns.