NZ halts offshore oil, gas exploration permits

Decision a sudden change of policy with no consultation: energy firm

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 firms, New Zealand Oil & Gas, said it had not been pre-warned.

“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.

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 energyrich northeastern region of Taranaki. But interest has waned in recent years due to lower global oil prices.

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 Party rule in October 2017.

The New Zealand National Party’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.