International Pacific

New Zealand halts future oil and gas offshore exploration permits

FILE PHOTO: New Zealand Prime Minister Jacinda Ardern reacts during a joint press conference with Australia’s Prime Minister Malcolm Turnbull after their bilateral discussions on economic and security issues in Sydney, Australia, March 2, 2018. REUTERS/David Gray

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By Charlotte Greenfield

WELLINGTON (Reuters) – New Zealand said on Thursday it would not grant any new permits for offshore oil and gas exploration, taking the industry by surprise with a decision that it said would push investment overseas.

The center-left Labour-led government said the move would not affect the country’s 22 existing exploration permits, and any oil and gas discoveries from firms holding those licenses could still lead to mining permits of up to 40 years.

Prime Minister Jacinda Ardern, who campaigned heavily on preventing climate change in the run-up to last year’s tight election, said the decision was a responsible step and provided certainty for businesses and communities.

“We’re striking the right balance for New Zealand – we’re protecting existing industry, and protecting future generations from climate change,” she said.

However, one of the country’s main energy companies, New Zealand Oil & Gas said it had not been warned of the decision.

“We note that the announcement is a sudden change of policy, which has not been consulted on and appears to conflict with the government’s pre-election promises,” it said in a statement.

The company, whose shares fell 3.2 percent, said the move would not have any immediate material impact on its financial position and it would continue with its existing projects.

However, it would manage the risks associated with the policy change by investing in exploration and production assets in other jurisdictions.

New Zealand usually holds an annual tender process to award oil and gas exploration permits, largely in the energy-rich northeastern region of Taranaki. But interest has waned in recent years due to lower global oil prices.

Only one permit was granted in 2017 compared with 10 in 2013.

The government said on Thursday that permits for searching for onshore oil and gas reserves would continue.

Ardern’s government, which has a support arrangement with the environmentally focused Green Party, ended almost a decade of center-right National rule last October.

National’s Energy and Resources spokesman Jonathan Young said the permit decision was devoid of rationale.

“It certainly has nothing to do with climate change. These changes will simply shift production elsewhere in the world, not reduce emissions,” he said.

(Reporting by Charlotte Greenfield, editing by G Crosse and Richard Pullin)
Copyright 2018 Thomson Reuters. Click for Restrictions.

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