Concern over govt policy runs high in oil, gas sector
While New Zealand’s government said a transition away from fossil fuels will take several decades, concern about the immediate future is running high in the sector given the investment already sunk into exploration.
Minister of Energy Megan Woods yesterday told an annual oil and gas conference the government is committed to “a long-term transition away from fossil fuels and towards renewable energy” and underscored no existing oil and gas production permits would be affected, with some forecast to continue production until 2046.
Her speech came after Prime Minister Jacinda Ardern last week announced the government is considering discontinuing the previous government’s annual Block Offer programme, which invites bids for new onshore and offshore oil and gas exploration. Yesterday, Woods said a decision whether to make the block offer was “weeks away”.
However, different participants at the oil and gas conference were more concerned about whether they would face challenges moving from existing exploration permits to production if they were to strike oil or gas.
New Zealand Petroleum & Minerals petroleum national manager Josh Adams also told the audience that existing rights will remain. However, when asked if an existing exploration permit guarantees the right to apply for a mining permit if a discovery is made he said: “That is a really good question and in terms of the uncertainty that you guys are going through at the moment, I fully understand that.”
He did not answer the question but said part of his role is helping the ministers understand the pros and cons of their proposals.
Gabriel Selischi, senior OMV vice president for Australasia, said the question was fundamental. “If we invest in exploration and have a find and we have difficulty converting it to a development, that is something I will have difficulty explaining” to management, he said.
OMV recently spent $578 million to buy Shell New Zealand’s remaining assets and will own 93.75 per cent of the Maui field and 74 per cent of Pohokura, assuming competition, overseas investor, and New Zealand Petroleum & Minerals approvals are granted. The deal also includes the Great South Basin venture, which includes a drilling commitment currently estimated to be US$50m.
Selischi said that any transition away from fossil fuels needs to have a business case and must be done in cooperation and consultation with the industry.
Selischi noted that the oil and gas industry already faces challenges in New Zealand due to global competition for capital, its size and the availability of resources like drilling rigs. In order to invest the industry asks for stable and predictable conditions over a number of years and clear regulations.
There was a heavy police presence outside the conference centre as around 200 protesters blocked entrances, chanted, beat drums and banged on the side of the building and doors.