Treasure beneath the land

These extracts from the Waitangi Tribunal's report on Maori claims to oil and gas royalties outline the origins of the claim.


Claimant groups assert that in terms of customary law, Maori as part of the natural world have proprietary rights in the resources of their universe, including the petroleum within their lands.

Those rights, they say, would have endured for as long as Maori retained ownership of their lands and would have entitled Maori to commercial exploitation of the resource beneath their lands.

But by 1937, and indeed long before then for many hapu and iwi, Maori lost ownership of much of their traditional lands, often as a result of Crown acts and policies since found to have been inconsistent with the principles of the Treaty of Waitangi.

The result, the claimants say, is that where Maori lost land by means that were in breach of treaty principles, their accompanying loss of any petroleum within the land occurred by the same treaty-breaching means.

The significance of 1937 is that it was the year in which petroleum in New Zealand was nationalised by the Petroleum Act.

That act extinguished all private landowners' pre-existing interests in petroleum and vested ownership in the Crown.

The claimants assert that the Petroleum Act was inconsistent with treaty principles for extinguishing Maori ownership of petroleum beneath what little remained of their customary land base.

Crown ownership of petroleum is now secured by the Crown Minerals Act 1991, another focus of the present claims.

The claimants' additional concerns about the 1991 act centre on its provision of a petroleum permitting and exploration regime that has, they say, too little regard for Maori interests in sites of traditional importance and, more generally, in environmental protection.

In broad terms, the Crown's response to the claims is to deny that any of its conduct or legislation that directly affects petroleum has been or is inconsistent with treaty principles.

While the Crown acknowledges that Maori had a customary right to petroleum where the resource was part of their land, and that before 1937 there were treaty-breaching acquisitions of Maori land, it submits that the 1937 Petroleum Act extinguished all Maori rights in petroleum in a manner consistent with the principles of the treaty.

Further, the Crown submits, the Crown Minerals Act 1991 is also consistent with treaty principles.

The presence of oil and gas often manifests itself by seeping to the surface, as is the case at Taranaki and on the East Coast.

These sites were known to local Maori and the phenomenon was integrated in their cosmology as was their usual cultural practice. Within matauranga, no distinction was made between man and nature.

It is the understanding of the nature of petroleum, its place within local whakapapa relationships with the land and linking with atua that underlies the claim of some Ngati Kahungunu claimants that all petroleum and natural gas are taonga as well as natural incidents of the land.

Whether oil is to be regarded as taonga or not, it is certain that Maori knew of its existence and knew that it was combustible.

They lacked the technological knowledge to extract and exploit the resource, and also any immediate cultural imperative to do so.

It should be remembered that this technology was a relatively recent one within western society as well. The Chinese had used oil drilling technologies for many centuries, but the West relied on whale and vegetable oils until the early 19th century when coal and natural gases began to be used for public lighting.

The first commercial oil well went into production in Pennsylvania, USA, in 1859, only six years before the first attempts were made in New Zealand to tap its petroleum deposits.

Thereafter, petroleum products were increasingly demanded by urban, industrial, and military expansion, and by the early 20th century, petroleum was regarded as a strategic resource, giving impetus to exploration activity and to Government regulation and eventual expropriation.

Settlers brought early knowledge of chemistry and drilling techniques to New Zealand, and the first attempt to sink a well was undertaken near the Moturoa seeps in 1865.

The Moturoa find helped to sustain interest in the oil resources of Taranaki at a time when empire, the importance of the British Navy in securing trade routes, and increasing dependence on heavy oil generally, loomed large in the minds of New Zealanders.

An era of geological survey and intensive prospecting followed World War I, but large-scale discoveries in South America, the United States of America and the Middle East distracted overseas capital from New Zealand, while the world-wide depression further dampened activity until strategic considerations again became paramount.

Another 24 wells had been drilled by 1955, but early results remained disappointing. Although hydrocarbon shows were common, no well penetrated the Kapuni Group resource until 1959, when the Shell BP and Todd consortium discovered the field.

Another 10 years of development drilling followed and the Kapuni field went into commercial production in 1970. Three further deep wildcat wells were drilled onshore without success, although hydrocarbons were encountered at Mangahewa-1 that were to prove significant nearly 30 years later when Fletcher Challenger Energy began developing the onshore gas field.

Offshore exploration followed the Continental Shelf Act 1964, which established the legal basis for the Crown's control of resources adjacent to but outside the territorial limit.



New Zealand's oil resource is currently worth about $1 billion a year to the producer, and gas generates about $450 million.

The Petroleum Act 1937 expropriated the resource to the Crown. Under section 3 (1) of the act all petroleum in its natural condition on or below the surface of any land within the territorial limits of New Zealand was declared to be the property of the Crown regardless of the ownership of the land.

Land included that covered by water, the foreshore, and the seabed to the outer limits of the territorial sea.

Royalties of not less than 5 per cent were to go to the Crown, and compensation was to be paid only for damage to the surface of the soil, not in respect of the loss of the petroleum itself.

The bill was passed over the opposition of Maori, although in a climate building to war, their position was essentially a moderate one.

Maori objected not to the Crown taking control of a strategic resource, but to the failure to either compensate them for loss of their rights in petroleum, which, as a natural feature of the land, they saw as protected under the Treaty of Waitangi, or, alternatively, to make provision for their ongoing interest in the form of a right in the royalties.

It is the position of the claimants today that the Government was in breach of the treaty when it thus expropriated Maori rights in petroleum, and, most particularly in its failure to pay royalties.

The Crown does not accept that allegation, arguing that it acted in good faith in passing the Petroleum Act.

All private property interests in that resource were nationalised, not just those of Maori, and the 1937 Government took adequate account of the implications of the Treaty of Waitangi in that legislation.

The Crown argues further, that compensation for loss of petroleum is not now warranted and by implication was not at the time because nationalisation was effected for the national good and was and remains justifiable in treaty terms.

What consideration was given to the possibility of a Maori interest in petroleum and the Crown's obligations under the treaty in the design of that legislation?

The Under Secretary of the Mines Department objected that: "To provide for the payment of royalties and other fees to Native land owners would very dangerously undermine the chief principles of the bill ...

"Unless the principles are established in New Zealand it appears almost certain that no major attempt will be made by private enterprise to discover petroleum."

The Solicitor-General, M. H. Cornish, to whom the Mines Department referred the issue, reached the conclusion that the bill was not in contravention of the treaty because it proposed to take from the Native owners no more than from the Europeans.

This equation of the spirit and letter of the treaty with a simple duty not to discriminate was challenged by Sir Apirana Ngata and others, but without success.

There was unanimous support in the House, and more widely, for this general appeal to security and economic interest.

As noted, Maori shared in the wider endorsement, and their challenge was not to the intention to nationalise the resource, but to the failure to pay landowners compensation for loss of property rights.