Govt slow to raise clean-up charges: oil industry

By Pattrick Smellie

The grounding of the Rena off Tauranga has seen oil polluting the ocean and beaches. Photo / Christine Cornege
The grounding of the Rena off Tauranga has seen oil polluting the ocean and beaches. Photo / Christine Cornege

The oil industry has been pressing the Government for the past five years to change the way it charges for oil pollution clean-ups, says John Pfahlert, the executive director of the Petroleum Exploration and Production Association of New Zealand.

"The proposed methodology would have seen our share go from $10,000 or so per offshore facility to over $200,000," he said. "Industry supported that approach", largely because it accepted that floating production, storage and offloading units (FPSO's) "posed a greater risk to the environment".

A review of oil spill preparedness in February identified west coast oil industry activity as the greatest threat to the environment in the event of an oil spill, with the only major oil spill risk on the east coast at the Marsden Pt oil refinery.

Pfahlert, who is also a member of Maritime NZ's Oil Pollution Advisory Committee, says the formula would also have seen 30 per cent increases in total oil and shipping industry funding for oil spill pollution readiness, with another 30 per cent rise in three years' time.

That would have taken the emergency response funding of around $4 million annually to around $6 million. Instead, the issue had become bogged down as officials debated what to include in a public discussion document that would precede any change to the way levies were set for the fund, which was intended only to fund "first responses" to an oil spill crisis.

He had now been told the review was on hold, following the grounding of Rena off Tauranga.

Like Transport Minister Steven Joyce and Labour transport ministers before him, Pfahlert was unaware New Zealand could have but had not signed a vital protocol to an international convention on oil clean-up cost-sharing that would have doubled the amount ships that caused oil pollution were liable for. New Zealand signed the convention in 2006, but it has not been mentioned in briefings to incoming ministers in the past two years.

Last year's oil pollution review coincided with the Gulf of Mexico oil spill, which led to urgent inquiries by the Ministry for Economic Development and Department of Labour to assess New Zealand's health and safety practice on offshore oil rigs. However, the same urgency does not seem to have applied to the five yearly review of the oil pollution readiness strategy.

Pfahlert said the total revenue collected by the oil pollution levy fund had been cut back about a decade ago, when it had built up to a multimillion-dollar cash pot, because there were so few oil spills to deal with in New Zealand. He said it was not well understood that no country in the world planned to be fully equipped for worst case scenarios.

"There's nowhere in the world where you would have had a substantially different response [to the Rena] in my view," he said. "That's just the way it is.

"It's always been understood the Government would write the cheque for the clean-up and seek payment from the owners."

- BusinessDesk

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