Fears oil move may have ‘chilling effect’

Officials warned the Government that its handling of announcements on oil and gas exploration could have a ‘‘chilling effect’’ on investment in the sector.

Yesterday morning, the Government released a series of documents related to a decision announced on April 12 to call an end to new offshore exploration permits, with a short reprieve for onshore permits in Taranaki.

Earlier Stuff revealed that the announcement was made as a result of a political agreement between the three coalition parties, with Cabinet informed after the decision was made.

The documents released show that the Government was considering a moratorium on offshore oil exploration pending the findings of a climate report, but later opted for a permanent ban.

Officials from the Ministry of Business, Employment and Innovation (MBIE) issued a warning about the impact possible moves could have on employment.

‘‘So long as industry is clear that there will be an offshore offering from 2019, which would at least include offshore Taranaki, then it is unlikely that there will be much impact on jobs or industry in the short term,’’ MBIE official James Stevensonwallace wrote on the Government’s plan for a temporary stop to offshore exploration.

‘‘If the scope of the review is poorly communicated or openended and includes the possibility that no offshore acreage will be offered in 2019 or later, then this will likely have a chilling effect on investment,’’ Stevenson-wallace added.

‘‘The immediate effects on employment are likely to be relatively small as there are relatively few employees involved in initial exploration efforts. Anecdotally, MBIE is aware of at least one field operator who is holding off making investments in the tens of millions of dollars until they get greater certainty from Government over the future of petroleum allocation.’’

At the time the decision was made, Prime Minister Jacinda Ardern said the move would have no immediate effect on jobs and the industry would continue to operate for decades, with existing permits covering an area roughly as large as the North Island.

In a statement accompanying the document release, Energy Minister Megan Woods acknowledged the decision was a political one, not an executive one.

‘‘As you know, this decision was about taking political leadership to act on climate change and its flow-on impacts. The decision was a political decision, looking out 30 years and taking steps towards 2050 being emission neutral. This is a signal about the future, while current exploration and production permits continue. We are working with communities affected on how we get there.’’

National’s energy spokesman, Jonathan Young, the MP for New Plymouth, claimed concern at the way the decision had been handled was spreading beyond Taranaki and the oil and gas sector.

‘‘People are appalled at the whole process or lack of it,’’ Young said. ‘‘I’m hearing business people in Auckland are horrified. Nobody thinks it’s the way it should happen.’’