Labour moots tough oil and gas law

David Cunliffe yesterday said Labour supported deep sea oil and gas exploration 'in principle' but would pass laws to toughen environmental protection. Photo / APN

Labour supports drilling but wants to introduce stronger environmental safeguards

Labour is looking at the Norwegian model for regulating the oil and gas industry, including stronger environmental safeguards and steeper taxes.

Leader David Cunliffe yesterday said Labour supported deep sea oil and gas exploration "in principle" but would pass laws to toughen environmental protection.

However, Labour would not immediately halt existing exploration programmes such as Texan company Anadarko's exploration of the Taranaki and Canterbury basins.

His comments were in line with those of deputy David Parker last year which followed mixed messages from the party, with economic development spokesman Shane Jones extolling the benefits in terms of jobs while other MPs such as Phil Twyford attended anti-Anadarko protests. Mr Cunliffe yesterday said New Zealand's law didn't require world's best practice in deep sea oil exploration, "so we will be changing the law so it does and we will expect future consents to meet those standards".

Labour was looking to other countries for a model.

"One country that we do respect highly is Norway. They have a lot of experience in terms of offshore oil drilling and they have good standards both for environmental management and also for the way they deal with the finances which flow from it."

Energy and Resources Minister Simon Bridges says New Zealand's regulation is already at world's best practice. But Mr Parker said Norway's model differed from New Zealand's in that it involved audits or rigorous government checks that companies were complying with rules rather than taking it on trust as New Zealand did.

Labour would also look to ensure the parent companies of oil and gas companies operating in New Zealand were "on the hook" for clean-up bills in the event of a spill. He would not comment on possible changes to the financial treatment of oil and gas companies but in Norway the industry faces effective taxes of 78 per cent.

Mr Bridges said last year that the Government received combined taxes and royalties from oil companies of about 42c in the dollar. In Norway the figure was higher because "if you sink a well in Norway chances are you'll find oil or gas. We're not in that position".

Prime Minister John Key said Labour's support of deep sea exploration put them at odds with potential coalition partners the Greens.

But Greens co-leader Russel Norman said while his party opposed deep sea oil exploration "that doesn't mean we can't work together".

Mr Cunliffe said the Greens were aware of Labour's position on deep sea exploration and "we have processes where we can agree to disagree on different matters".

Mr Cunliffe said Labour had dropped its policies of having the first $5,000 of earnings tax free and of removing GST from fresh fruit and vegetables.

"While these were worthwhile policies, we believe there are better ways to help struggling Kiwi families," he said.