Wednesday, June 19, 2024

Government to reverse ban on oil and gas exploration

Resources Minister, Shane Jones, has today announced the Government will remove ban on petroleum exploration beyond onshore Taranaki as part of a suite of proposed amendments to the Crown Minerals Act to deal with the energy security challenges posed by declining natural gas reserves.

“Natural gas is critical to keeping our lights on and our economy running, especially during peak electricity demand and when generation dips because of more intermittent sources like wind, solar and hydro,” said Minister Jones.

“When the exploration ban was introduced by the previous government in 2018, it not only halted the exploration needed to identify new sources, but it also shrank investment in further development of our known gas fields which sustain our current levels of use.

“Without this investment, we are now in a situation where our annual natural gas production is expected to peak this year and undergo a sustained decline, meaning we have a security of supply issue barrelling towards us.”

The Minister said rebuilding investor confidence in New Zealand’s petroleum sector will require more than removing the ban. The Coalition Government is proposing further changes, agreed by Cabinet, to re-establish New Zealand as an attractive and secure destination for international investment, he said.

The changes were agreed in the New Zealand First and Act coalition agreements with the National Party.

“Our job as the Government is to provide the right policy settings to enable the sector to get to work, and that’s exactly what we are aiming to achieve through these amendments,” Mr Jones says. 

“Some of our current settings are a barrier to attracting investment in exploration and production because they are overly costly and onerous on industry. Some obligations lack necessary flexibility, and compliance obligations are uncertain and unclear.

“As well as removing the ban, we are proposing changes to the way petroleum exploration applications are tendered and allocated, aligning the petroleum decommissioning regime with international best practice, and improving regulatory efficiency.”

New Zealand cannot ignore the significant economic contributions the petroleum and resources sector delivers, and the opportunities further strategic development represents, said the Minister.

“Our petroleum and minerals sectors contributed $1.9 billion to GDP in 2020-21 and $236 million in Crown revenue in 2022-23. In 2023 mining employed around 6000 people, the majority of which are based in regional communities.”

“I want a considered discussion about how we use our natural resources to improve the security and affordability of energy and resources supplies, stimulate regional economic development opportunities, and increase New Zealand’s self-sufficiency to protect against volatile international markets,” he said.

The Bill will be introduced to Parliament in the second half of 2024.

For more information, visit 2024 Proposed amendments to the Crown Minerals Act 1991 | Ministry of Business, Innovation & Employment (mbie.govt.nz).

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