Thursday, May 23, 2024

Overseas oil and gas decommissioning models considered for local solution

Overseas models for regulating the oil and gas sector, including their decommissioning regimes, are being scrutinised as a potential template for New Zealand’s own sector, Resources Minister Shane Jones announced today.

Mr Jones said the Government was focused on rebuilding investor confidence in New Zealand’s energy sector as it looks to strengthen the economy.

To do that, it is proposing further changes to the Crown Minerals Act 1991 while balancing the need for environmental protections, he said.

“New Zealand taxpayers were left to foot the bill to decommission the Tui oilfield when Tamarind Taranaki went into liquidation. We won’t be letting that happen again,” Mr Jones says.

“There is a balancing exercise required, however, as some of the 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.

“My goal is to get the balance right between regulatory burden and managing fiscal risk.”

Mr Jones said he was carefully considering options, including the models used in overseas jurisdictions.

“There are well-established regimes such as in the UK and Australia that have been dealing with these issues for decades. Kiwis can be assured that we won’t let the oil and gas players here off the hook when it comes to the cost of decommissioning energy infrastructure. However, I am also considering whether a ‘gold-plated’ approach to decommissioning is required or whether some infrastructure can be left in place if it does not pose a hazard.”

Hui with iwi and hapū are planned for early May to discuss the proposed changes to the Crown Minerals Act.

Mr Jones and Māori Crown Relations and Conservation Minister, Tama Potaka, will host the hui to share more on the changes and hear feedback ahead of finalising options for consideration at Cabinet.

“Decommissioning petroleum infrastructure carries significant costs, and our regulatory regime must protect private landowners, the Crown and ultimately taxpayers from having to pick up the tab in the unlikely event that a permit or licence-holder fails to do so,” Mr Jones says.

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