A major oil explorer is quitting New Zealand as spending on offshore drilling plunges from $700 million three years ago to nothing and the government promises to tighten controls on the industry.
US company Anadarko said that with persistently low oil prices marginal investments in speculative, frontier areas were less attractive.
Country head Alan Seay confirmed it had made the "tough call" to pull out although its partners in the Carrack-Caravel prospect off Canterbury, Lattice Energy Resources and Discover Exploration, had indicated they want to continue.
The oil and gas sector said it remained optimistic about prospects and was hopeful the new government would make decisions "based on science".
The Petroleum Exploration and Production Association of NZ (Pepanz) head Cameron Madgwick yesterday said it was disappointing but not surprising to see Anadarko leave.
"The company is pulling back on some of its international operations due to the low global oil price," he said.
"It has nothing to do with the prospects here in New Zealand. We are still considered to have exciting potential, as seen by the recent New Zealand Oil & Gas study into the Barque prospect near Oamaru."
New Zealand was competing with other potential markets around the world and needed to have good policy settings to remain attractive as an investment destination.
Pepanz said the sector contributed an estimated $2.5 billion to GDP and the government collected about $500 million a year in royalties and income tax from the sector.
Speaking before news of Anadarko's withdrawal, Madgwick said confidence had grown in the sector as the oil price stabilised.
"It's that stability that brings the certainty that the sector needs. As a consequence people are getting back into exploration activities. That obviously slowed down when the price was so low."
He said a seismic survey off the Taranaki coast planned this summer by Schlumberger, a Houston-based company, was one of the biggest undertaken off the New Zealand coast but conceded there was "less happening than more recently".
A report from Woodward Partners showed there are no firm plans for offshore drilling.
Three years ago there were up to 12 drilling programmes as oil prices were near record highs with close to $700m being spent on work off the coast. Onshore activity is well off the highs of three years ago.
The report said the only two offshore drilling prospects, the Carrack-Caravel that Anadarko had been involved in and Shell's Great South Basin acreage, were not certain to be drilled.
Energy and Resources Minister Megan Woods said the government wanted to get the environmental standards right around offshore drilling.
"One of the other things is making sure we've got our laws right around who pays for any mistakes that happen," Woods said.
"[What] I don't want to see is an international company getting off the hook and the taxpayer being left with the cleanup bill."
Pepanz said in a briefing paper submitted to Woods that there was a potential to increase the sector's contribution to the economy, especially if major new developments, such as the Barque prospect off the South Island which has potential to yield large quantities of gas, is developed and successful.
The association is nervous about a blue whale sanctuary proposed off Taranaki, which was part of Labour's agreement with the Greens. The area is so far this country's only productive offshore oil and gas basin.
"It is also important to take a strategic, science-based, practical approach to marine protected areas to provide certainty to all affected parties — including iwi and industries."
Forest & Bird has sent an open letter to Schlumberger urging it to abandon its plans.
Chief executive Kevin Hague said the government had made it clear it wanted to be a world leader on environmental issues and climate change.
"The Government also stated its intention to safeguard the healthy functioning of marine ecosystems and look at establishing a Taranaki blue whale sanctuary. Yet we know that seismic surveying is a serious threat to marine mammals, including blue whales."