Case against Energy Minister in court as gas company claims exploration ban 'breached rule of law'

A case against the Energy and Resources Minister, Megan Woods, over the 2018 offshore exploration ban begins in the High Court in Wellington on Monday. Photo / Mark Mitchell

A challenge to the Government's 2018 announcement that it would immediately stop offering offshore oil and gas exploration permits begins today, with a gas producer claiming the move breached the rule of law.

Greymouth Gas Turangi Limited is suing the Minister of Energy and Resources Megan Woods over the way the Government gave effect to the offshore permit ban, as well as the refusal of the company's application for a permit in Taranaki in 2017.

The case is being heard in the High Court in Wellington.

On April 12, 2018, Prime Minister Jacinda Ardern led a group of ministers into the Beehive theatrette to announce that the Government would no longer offer offshore petroleum exploration permits.

Greymouth's submissions argue that if the ban had been imposed after it carried out consultation and changes to the law, then there would not be an issue with the ban.

But it says that even though changes to the Crown Minerals Act were not made until November 2018, seven months after the announcement, the chief executive of the Ministry of Business, Innovation and Employment gave effect to the ban immediately.

"With significant prejudice to active industry participants who have relied on the procedural protections in the current regime and considerable detriment to New Zealand's standing as a country with low sovereign risk, the ban was immediately acted on as though it was already the law."

Mark Dunphy, executive chairman of Greymouth Petroleum, likened the case to the challenge of Wellington lawyer Andrew Borrowdale, who sought a judicial review of the legality of the Government's lockdown decision.

The High Court found that, while the orders were necessary, the first nine days of lockdown were unlawful because the Government had not taken the right steps.

Dunphy said at the time the decision was made the Minister of Energy Resources was required to act in accordance with the law of the time, which required the promotion of petroleum permits.

"The obligations of the minister, at law, are to permit and to see New Zealanders exploit the resources that we've got, and if they don't like the law, they've got to change it. What the Prime Minister didn't do, what the Minister of Energy didn't do, is they didn't consult in the way they're required to in making changes," Dunphy said.

"The last prime minister who conducted themselves in asserting royal authority was Robert Muldoon. He was taken to task for it and I see the [current] Prime Minister was taken to task by Mr Borrowdale. The court determined that the rule of law does matter."

Greymouth is seeking to be granted a permit near the Pohokura and Kowhai fields in northern Taranaki.

Even though the Crown had offered to reconsider Greymouth's application, given it had also had its application rejected in 2018 "and given there has been no change of Minister or of key officials, Greymouth has no confidence that justice can prevail without this Court hearing".

Woods has declined to comment while the matter is before the courts.

Dunphy says Greymouth is the second largest New Zealand-owned gas producer and that it supplies 15 per cent of New Zealand's daily gas production. In 2018 the NBR estimated his wealth at $220 million.