Offshore oil ban repeal: Coalition seeks consensus amid opposition

Shane Jones leads repeal of offshore exploration ban, calling it key to restoring energy security and investor confidence.

By Russell Palmer of RNZ

Coalition parties are calling for the Opposition not to revive its offshore oil and gas exploration ban in future, in the hope that more political consensus will bolster the industry – but those pleas seem to be falling on deaf ears.

The legislation scrapping the 2018 ban passed through Parliament on Thursday night with Labour, the Greens and Te Pāti Māori pledging to restore it if they win power – a stance that could yet keep oil companies from investing in exploring for new wells.

The repeal fulfils election promises from both National and Act, though New Zealand First’s Shane Jones has been leading the effort.

Jones stood alongside Jacinda Ardern in 2018 to announce the ban. In a media statement after the bill passed, his boss Winston Peters rubbished as “flimsy” official reports suggesting the cost of the ban could be up to about $8 billion, and said using fewer fossil fuels would lower emissions.

However, in a statement on Thursday, Jones said the ban was “ill-fated” and “has exacerbated shortages in our domestic gas supply by obliterating new investment in the exploration and development needed to meet our future gas needs”.

“New Zealanders are bearing the brunt of this constrained gas supply, and energy security concerns are impacting investor sentiment ... we are seeing businesses in the regions closing as a result with Kiwis losing their jobs, and we’re importing hundreds of tonnes of Indonesian coal to meet peak energy demand.

“This legislation is just one of many actions we are taking to get the right settings in place to resuscitate sector confidence, shore up energy supply, and protect electricity affordability.”

He was absent from Parliament on Thursday, leaving the main Government speech to the National Party’s Simon Watts – the Minister for Energy and Climate Change.

Watts said the opposition’s argument that reversing the ban would not yield new gas for a decade was “a distraction”.

“The immediate signal that this bill sends to investors is critical now. It encourages immediate investment in long-term exploration and in maximising production from our existing fields, which can deliver benefits far sooner.

“New Zealand is committed to a clean-energy transition and meeting our emissions targets. We have committed to deliver net zero by 2050, including by doubling renewable electricity, and removing consenting barriers. Natural gas remains critical to our energy security. Without gas, we would need to either rely on more coal, which results in around twice the carbon dioxide emissions than natural gas, or face energy insecurity and higher prices.”

His Labour Party counterpart Megan Woods, however, said the evidence showed record investment in existing fields after 2018.

Labour MP Megan Woods has slammed the Government’s offshore exploration push. Photo / Mark Mitchell

“For this Government to claim that it had a chilling effect on investment is simply wrong. What we had was those offshore oil and gas operators looking for every last bit they could eke out of the existing fields, and it is not there.

“Then we had Shane Jones saying that this will open up opportunities off the East Coast of the South Island. Well, news flash: billions of dollars have been spent looking for that particular El Dorado ... this Government is going to give $200 million to offshore companies to go and have a look again where they’ve already decided there are not commercial finds available.”

She pointed to official analysis showing reversing the ban would add 14.2 million tonnes of emissions, and “a bit that should have been redacted from the regulatory impact statement” showing it could affect trade.

“Let me read from that: ‘Legally privileged: Ministry of Foreign Affairs and Trade assessed that reversing the 2018 ban would likely be inconsistent with the obligations in several of New Zealand’s free-trade agreements’ – so farmers need to be worried, our access to the EU and the UK are being put at risk.”

The Green Party spokesman for just transitions, Steve Abel, was also sceptical the oil industry could be attracted back.

He was part of the Oil-Free Seas Flotilla in 2011 that harried Petrobras’ surveying ship for 42 days, welcomed to the area by a 500-strong haka “said by Te Whānau-a-Apanui, the iwi greeting us, to be the biggest haka since James Cook had arrived in that part of the country – I’m hoping we were more worthy of it than he was”, Abel said.

The Green Party’s Steve Abel says the 2018 ban simply sealed the fate of an oil industry already in decline. Photo / Marty Melville

He listed off a series of oil companies that exited New Zealand before the ban came into place: Exxon Mobil abandoning its southern oil and gas hunt in November 2010 after three years, Petrobras in December 2012, Texan driller Anadarko exiting its permit on the North Island’s west coast in May 2014, Statoil quitting its Northland permit in October 2016, and Shell selling its remaining assets to OMV in March 2018.

He said the ban was the “final nail in the coffin of an industry that was already declaring its own demise in this country, because they came, they prospected, they found nothing, and they found nothing but overwhelming public opposition from the people of this country”.

Echelon Resources – the company formerly known as New Zealand Oil and Gas, last month told RNZ the best wells are typically drilled first, so new drilling will be more difficult and expensive.

Its managing director, Andrew Jeffries, said other countries had more political consensus, making New Zealand an even more unattractive option for investment.

Act Party MP Simon Court said the repeal would restore certainty, credibility and confidence, but called on Labour not to reimpose the ban if it won power.

“Today marks the end of an era – a really bad one. It marks the end of a six-year reign of economic vandalism and energy illiteracy by the previous New Zealand Labour Government.

“Even the Honourable Shane Jones said at the time – bless his soul – that ending oil and gas exploration ‘is the only scenario’. When he stood at that podium, I was shocked, but I’m pleased that minister has come to his senses – but profoundly disappointed that the Labour Party still has not.”

Court’s leader, David Seymour, said it was “very possible that they won’t find the gas, but the impediment to people getting cheaper energy should not be our own Government, and that’s why I say if New Zealand First can change their mind then Labour should be able to do that too”.