Ban sends bad signal: industry

Oil and gas players united in dismay at Govt plans

OIL and gas industry and business leaders say the the government’s ban on new off shore exploration sends a bad signal to potential international investors in other parts of the economy and could result in New Zealand having to import gas.

New Zealand Oil & Gas chief executive Andrew Jeffries said the government announcement was like “banging a big ‘you’re not welcome here’ sign on the front lawn”.

He warned that even though there was further exploration allowed within existing permit areas, operators and investors could be deterred from taking any discoveries to production because of regulatory uncertainty. This could lead to gas shortages which would badly hit households and big industrial users.

“Sooner rather than later we will have to start importing gas and that will be high priced gas. Consumers will have to pay that price,” said Jeffries.

Importing liquid gas for more than 280,000 industrial, commercial and residential customers would also do environmental harm as it needed to be processed as well as shipped here.

The government said the decision marked the start of a 30-year transition away from fossil fuels in pursuit of a net zero emissions economy by 2050.

The ban on new offshore oil and gas permits is effective immediately, but will not affect existing permits or onshore exploration in the Taranaki region over the next three years. The government has promised a “just transition” rather than a shock to the oil and gas workforce.

“Transitions have to start somewhere. And unless we make decisions today that will essentially take place in 30 years time, we risk abrupt shocks,” said Prime Minister Jacinda Ardern.

Jeffries said NZOG would work

Business NZ chief executive Kirk Hope

its existing permits hard but future growth would be overseas.

“New Zealand Oil & Gas intends to manage the risks associated with the government’s policy change by investing in exploration and production assets in other jurisdictions.”

Business NZ chief executive Kirk Hope said the Government’s decision to continue to recognise existing permits was important, as doing otherwise would have had a potentially devastating effect on investment into New Zealand.

“It will be important to see what Government commitment is being made to affected businesses, and how quickly other high value businesses can be developed to fill the void.”

Exporters such as Fonterra, NZ Steel, Methanex and Refining NZ might find their products less competitive in world markets.

“For the longer term, this decision