May 26, 2015
In a Rigzone article summarizing the economic forecast in Alberta’s oil patch, Capital Markets partner Neville Jugnauth commented on the province’s political environment. Neville also recently shared his oil and gas expertise as the keynote speaker at the MergerMarket Energy Forum in Houston, Texas, addressing many of the issues raised in the firm’s publication, Canadian Oil & Gas 2015 Outlook. Below is an excerpt of the Rigzone article.
Alberta depends on energy for almost 75 percent of its export revenue. Energy exports are projected to shrink by 25 percent this year, but bounce back with 27 percent growth in 2016.
What’s more, Alberta’s political environment is in flux, said Neville Jugnauth, a partner at the Torys LLP law firm in Calgary, during the recent Mergermarket Energy Forum in Houston. The collapse in oil prices already set back Alberta’s industry, which accounts for three-quarters of the Canada’s oil production. All told, oil and gas proceeds represents 10 percent of Canada’s gross domestic product, Jugnauth said.
“Fast forward to our elections in May and we are left with a situation in which the dynamics have drastically shifted,” he explained. “After 44 years of government by Progressive Conservatives, [Alberta experienced] a political swing from right to left that no one had anticipated.”
Still, Jugnauth said, the shifting political sands represent more of Albertans’ discontent with the Progressive Conservative Party than a policy change. However, the new leadership is still getting its bearings and it could take months before the oil and gas industry feels the net effect of the change. The New Democratic Party will have to manage lower royalties resulting from the lower commodities environment while it attempts to implement a 2 percent increase in corporate taxes.
To read the full article, click here.
To read Canadian Oil & Gas Outlook 2015, click here.