New Zealand is set to rescind its offshore petroleum exploration ban in response to the country’s dwindling natural gas reserves and growing energy security concerns.
The government aims to introduce the Crown Minerals Act Amendment Bill in parliament in H2 2024, which will facilitate the lifting of the ban.
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New Zealand halted offshore oil and gas exploration permits in 2018 under former Prime Minister Jacinda Ardern.
The proposed legislation aims to lift the prohibition on exploration outside onshore Taranaki, an area of the North Island of New Zealand that is rich in energy.
It will allow petroleum permit-holders to access certain conservation areas for petroleum activities, barring minimal impact activities.
New Zealand’s Resources Minister Shane Jones emphasised the importance of natural gas in the nation’s power supply, particularly during times of peak electricity demand and when renewable sources are less reliable.
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By GlobalData“When the exploration ban was introduced by the previous government in 2018, it not only halted the exploration needed to identify new sources, but it also shrank investment in further development of our known gas fields, which sustain our current levels of use,” Jones said.
“Without this investment, we are now in a situation where our annual natural gas production is expected to peak this year and undergo a sustained decline, meaning we have a security of supply issue barrelling towards us.”
The bill also suggests revisions to the allocation of petroleum exploration permits, offering a choice between a competitive tender process and a non-tender, priority-in-time method.
Additionally, it recommends updates to the petroleum decommissioning requirements to better align with international standards and balance regulatory burdens and risks.
“Some of our current settings are a barrier to attracting investment in exploration and production because they are overly costly and onerous on industry. Some obligations lack necessary flexibility, and compliance obligations are uncertain and unclear,” the minister added.
The petroleum and resources sector added NZ$1.9bn ($1.16bn) to New Zealand’s gross domestic product in 2020–21 and generated NZ$236m in Crown revenue in 2022–23.
