Hefty price for decommissioning rigs

A financial time bomb is ticking off the Taranaki coast which could cost taxpayers hundreds of millions of dollars.

The Government faces a bill of between $800 and $855 million during the next 25 years as New Zealand’s aging offshore rigs and structures need to be decommissioned.

The five oil and gas fields and six associated structures are all off Taranaki’s coast and include the Maui A and B platforms, the Tui FPSO (Floating Production Storage and Offloading vessel), the Maari wellhead platform and FPSO, the Kupe wellhead platform Pohokura wellhead platform.

The Green Party’s Gareth Hughes said documents showed the Crown was liable for tax and royalty rebates equal to 42-48 per cent of the total decommissioning cost for each of the oil rigs in New Zealand waters.

‘‘This is a staggering amount of money that future taxpayers will have to provide to clean-up after the oil industry has finished making its profits,’’ Hughes said.

‘‘Government officials have warned the minister that one of New Zealand’s aging oil rigs could be decommissioned soon, depending on the international oil price, and that comes at a huge cost to the and government and the taxpayer.’’

Energy and Resources Minister Judith Collins said work could begin within the next three years.

’’The Tui field is expected to be the first, which could be as early as 2020,’’ she said.

Collins confirmed the oil and gas companies legitimately got to claim a rebate, which would be paid out of the general consolidated fund.

‘‘The Government has made about $3.2 billion in oil and gas royalties since 2008, and we continue to collect hundreds of millions of dollars each year.’’

She said the government had been earning royalties from the Maui field since the late 1970s.