Comment: Introducing powers to confiscate existing natural gas reserves would be an extremely risky move for the Government, writes National's Energy and Resources spokesman Jonathan Young.

After already taking away the right to explore for natural gas, the Government is now considering introducing powers to confiscate existing natural gas reserves.

It's not because they want to do away with gas, it's because they are fearful of running out of the precious stuff that is needed to support the electricity sector, which has become increasingly valuable due to the Government's ban.

Having the lights go off is the death-knell of any Government, and if that happened, the blame would be sheeted home directly to the Government for attempting to phase out the hydrocarbon sector in the first place.


The Cabinet Paper on Progressing the Electricity Price Review Recommendations that Minister Megan Woods signed off on and released on Friday, February 14, said in paragraph 107:

"Also of interest as a low-impact option is whether policy levers for the Minister of Energy and Resources are warranted on the grounds of market failure. A possible option is the provision of emergency powers to reallocate electricity or gas in situations of acute electricity or gas shortage."

This is not a low-impact option. This is the power of confiscation by the state over property rights contracted between private companies.

It means that if we have a natural gas shortage, then the Minister can simply override any commercial contracts between companies and confiscate their gas.

Companies like NZ Steel, NZ Refining, or Methanex will be wary as having this provision hanging over them would in my opinion make their businesses extremely risky.

This makes New Zealand a less attractive business environment to operate in.

In my opinion, it makes us a truly banana republic where we have become politically unstable, because of an increasing vulnerability in our energy system due to less natural gas being available.

Instead of encouraging more exploration to address our dwindling gas supply, they are giving themselves the power to seize existing reserves.


When the Government unilaterally and without warning told New Zealand and the world on Thursday morning, April 12 2018, that it had banned new exploration permits, New Zealand was internationally blacklisted.

National's Energy and Resources spokesman Jonathan Young. Photo / Mark Mitchell
National's Energy and Resources spokesman Jonathan Young. Photo / Mark Mitchell

This move to override commercial contracts and confiscate electricity or natural gas, could easily have a similar effect.

It would create a chilling effect for international investors as they see New Zealand as a risky place to do business.

Who is going to set up a large business if at any time, at the whim of an Energy Minister, you could have your natural gas or electricity confiscated?

The irony of this whole situation is that it proves that natural gas is essential to New Zealand's economy, and that the Government's decision to ban new exploration for it has made our energy system vulnerable.

But instead of the Government fixing their initial mistake, they're just following it up with another.