The government is seeking to head off criticism of its decision to stop granting offshore oil and gas exploration permits by talking up the potential for a major oil and gas find in the Barque prospect, off the Canterbury coast.

Oil and gas industry participants appeared blind-sided by the announcements, with the country's largest gas user, Methanex, saying it would be issuing a public statement "in the next couple of hours" and New Zealand's only listed petrochemical producer, New Zealand Oil & Gas also yet to make a statement when NZX trading began at 10am.

NZOG shares fell 3.2 per cent to 60 cents in early trading.

The Business Energy Council, an arm of business lobby group Business New Zealand charged with advancing thinking on the path to a low-carbon future, said it was consulting with its members before issuing a statement.


Likewise, OMV, now the largest owner of both production and exploration assets in New Zealand since announcing its purchase of the local interests of Royal Dutch Shell last month, had yet to comment by mid-morning.

However, it appears the industry will approve of the concept of transition away from fossil fuels but argue that the emissions trading scheme is the best mechanism for achieving this and that today's announcements will only create uncertainty for New Zealand's future energy supplies.

A question and answer document on the Petroleum Exploration and Production Association of New Zealand's website focused heavily on the potential impact of the decisions on domestic gas users who rely on domestically produced natural gas or LPG for water, cooking and heating.

However, Energy Minister Megan Woods stressed in a press conference detailing the announcements that there was a strong likelihood of further oil and gas finds from the 57 exploration permits already in existence and the fact that the longest-lived of the oil and gas fields already in production would continue to supply hydrocarbons until the mid-2040s.

"There are potentially trillions of cubic metres in the Barque field," she said, referring to an offshore oil and gas exploration permit area off the Canterbury coast, where NZOG is the licence operator.

However, the signal from today meant that for South Island industries using coal for industrial heat - a reference mainly to Fonterra Cooperative Group, which uses coal at its milk-processing plants - it was time to start assessing bio-fuels and electricity for heating in the future.

The government is targeting net zero carbon emissions from the New Zealand economy by 2050 and 100 percent renewable electricity in a normal year for hydro-electricity production by 2035.

The announcement on ending offshore exploration came ahead of today's annual release of the country's greenhouse gas "inventory", and a day after the coldest night of the year so far, which saw the Huntly power station running on coal to maintain national electricity supplies.


The announcement also coincided with a spike in global prices to a three year high of close to US$67 ($91.01) a barrel, stoked mainly by escalating tension between the US and Russia over the Syrian civil war.

In a show of the coalition government's solidarity on the decision, Prime Minister Jacinda Ardern fronted today's press conference, flanked by Greens co-leader and Climate Change Minister James Shaw, New Zealand First MP and Regional Economic Development Minister Shane Jones, and Woods.

Jones made it clear NZ First, which supports extractive industries, had supported the decision to end offshore oil and gas exploration immediately and to review onshore exploration permits in three years by insisting that existing rights for both exploration and production be preserved.

However, it appears that was not a difficult win.

Ardern stressed repeatedly that today's decision was intended to put the country on a 30-year path to much-reduced reliance on fossil fuels, in line with the commitments to reduce carbon emissions under the global climate change action pact signed by the previous government in Paris in 2015.

By taking concrete action towards that goal now, Ardern said the government was seeking to avoid the dislocation to communities that occurred during the shock economic reforms undertaken by a previous Labour government, in the 1980s.

"I saw that once in the 1980s and I don't want to see it again," she said. "This won't change the landscape immediately, but it will eventually."

Shaw described it as "a gentle transition".