Monday, June 24, 2024

New law to fuel oil and gas field decommissioning

Petroleum permit and licence holders operating in New Zealand will now have an explicit statutory requirement to carry out and fund the decommissioning of oil and gas fields after a new law was given Royal assent today.

Energy and Resources Minister, Megan Woods said that once in effect, the Crown Minerals (Decommissioning and Other Matters) Amendment Bill will mitigate the risk to the Crown and taxpayer of having to fund decommissioning if a permit or licence holder is unable to do so.

“The amendments to the Crown Minerals Act 1991 address a fundamental gap in the legislation to provide greater protection in respect to decommissioning obligations,” said Dr Woods.

“What the situation with the Tui oil field showed me, where the Crown was left with the responsibility and huge tab for cleaning up, was that the previous decommissioning requirements were wholly inadequate. That’s why we have taken decisive action.

“What’s more there are now penalties for failing to meet the statutory requirement to carry out and meet the costs of decommissioning. Perpetual liability has also been introduced, so if a permit or licence is transferred, those transferring their interest will continue to be held liable for the decommissioning costs if the current holder fails to fulfil their obligations.”

The Minister said that while the Tui episode was the trigger for the changes, the new law was a considered suite of measures to provide long-term solutions to improve the regulation of the fast-changing sector.

“There will also be a tougher test for permit acquisitions and the regulator gets new powers to monitor the financial position of a permit or licence holder and carry out assessments of their financial capability,” she said.

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