No one should be surprised by the government's decision to halt offshore oil and gas exploration permits, Prime Minister
Jacinda Ardern says.
Prime Minister Jacinda Ardern Photo: RNZ / Rebekah Parsons-King
Environmentalists are hailing it as a victory, but the chief executive of the petroleum exploration industry body says
it shows a complete misunderstanding of the industry.
Energy and Resources Minister Megan Woods announced the move this morning
She said there would be no new permits for offshore exploration granted, but the current exploration and mining permits
would continue and onshore exploration will be limited to Taranaki.
Move 'completely baffling' and shows 'complete misunderstanding of the industry' - PEPANZ
Petroleum Exploration & Production Association New Zealand [PEPANZ] chief executive Cameron Madgwick told Morning Report there should have been consultation before the decision was made, and the move showed the government did not understand
"It shows a complete misunderstanding by the government of how our industry works ... these are multi-decadal decisions,
there are people here today that are looking forward to the future and what that might look like for their business, the
planning around that indeed the equipment that might be needed."
Mr Madgwick said it would have a massive impact on jobs and other forms of fuel would become more expensive, and said it
was an issue of energy security.
"This is signalling very clearly that [oil and gas workers and business owners'] job security is in question. To claim
anything different is disingenuous.
"Permits that are currently on foot, they will remain ... but it's a finite resource, so one has to keep looking for it
as it declines. New exploration permits have approximately a 20 percent success rate.
"There's a very high probability that our existing reserves will deplete in a very short period of time, so not
continuing to look offshore, where the largest reserves are likely to be, is completely baffling."
Ms Woods said the industry should not be surprised by the government's stance however, telling Morning Report she gave a speech at the PEPANZ conference last month
which signposted the plan.
"I explicitly said I woudn't be making any announcements about block offer 2018, but I gave a speech that laid out the
long-term direction of government that talked about the need for us to be putting in place the transition planning and
announced that I've asked MBIE to start that transition planning."
She said the government wanted to avoid a shock to the economy, which was why they had not pulled the plug entirely.
Prime Minister Jacinda Ardern also said no one should be surprised by the government's decision.
"I would be surprised if they consider themselves to have been blindsided.
"Look, we flagged both our interest as a part and as a government towards moving away from fossil fuels, we've always
talked about a just transition and the need for a lead time.
"We knew very clearly what the industry's view was."
Clash with Labour's policy - Petroleum boss
Mr Madgwick said the actual plan ran counter to Labour's stated policy, however.
"It is a surprise ... the Labour Party energy policy specifically talks about offshore exploration, it specifically
talks about the continuation of the block offer.
"Yes, it talks about a transition to a net zero emissions economy, but banning one form of fuel is not the way to do
that. It's about the emissions not the fuel.
"This is not a uniquely New Zealand problem and indeed the tools to address climate change aren't about banning fuel
[exploration], they are about emissions reduction.
"They are quite different things."
He admitted the government's move to stop granting new exploration permits was not a ban on fuel, however.
Cleaner gas cannot be exported - Woods
Mr Madgwick also suggested New Zealand's gas was a cleaner-burning fuel which could allow a transition away from coal.
"We would say that you should transition in the first instance to gas, as the cleaner-burning of the fossil fuels. Most
of the world still relies heavily on fossil fuels for electricity generation," he said.
New Zealand Oil and Gas has interests in several onshore wells and a permit to explore a large area off the coast of
South Canterbury, known as the Barque prospect, which has been touted as a potentially significant gas producer
Its chief executive Andrew Jeffries also backed the suggestion New Zealand gas could help other countries move away from
other, higher-emission fuels.
"The world needs the energy, it's not going to be helped by us thinking locally and saying 'we're all right and not
going to explore'," he said.
"Clean energy produced in New Zealand has a real place in the world's energy mix," he said.
Mr Jeffries said he agreed that heavy-grade oil produced from oil sands and the like should not be used, but
lighter-grade oil and natural gas would be needed for the forseeable future.
However, although Ms Woods admitted New Zealand's gas did produce about half the emissions of oil, she said the gas
could not be exported anyway.
"The reality is that we don't export our gas in New Zealand, in order to export it, it needs to be transformed into
LMG," she said.
To give an idea of the scale of such an endeavour, she said plans to construct an LMG production plant in Australia
estimated a cost of $46 billion.
She said that argument also applied only to gas, as oil from New Zealand had the same level of emissions as in other
parts of the world, and said the world was moving away from fossil fuels anyway.
Ms Woods also said future mining permits could also be granted to current exploration permit holders, meaning
exploration could continue until 2030 and mining could last beyond 2050.
The slump in world oil prices in recent years killed interest in offshore exploration in New Zealand waters. One permit
was issued last year, none in 2016. However, 25 were issued between 2012 and 2015, for periods of between 10 and 15
And in 2016, global heavyweight explorers -- U.S. based Anadarko, Brazil's Petrobras, and Norway's Statoil -- all
surrendered offshore exploration permits.
Move welcomed by environmentalists
The government said it was taking an important step to address climate change and create a clean, green and sustainable
future for New Zealand.
Greenpeace director Russel Norman told Morning Report it was a huge win for the climate.
"I mean New Zealand has the fourth biggest exclusive economic zone on the planet," he said.
"In my view they should have gone further, when you look at the science we can't afford to burn even half of existing
oil reserves if we want to avoid a climate catastrophe, so in my view we should have revoked the existing permits and we
shouldn't be doing onshore Taranaki oil and gas exploration.
"But nonetheless this is still a very significant decision and I think it will be globally significant.
He said the world was waking up to the realities of climate change.
"People are putting pressure all around the planet now, because we understand the global problem. We need to act
The World Wildlife Fund also described the announcement as a huge step forward for New Zealand.
Last month, the Prime Minister Jacinda Ardern accepted a petition signed by 45,000 people wanting an end to offshore
A week later more than 200 protesters also blocked entrance to the New Zealand Petroleum Conference
, during which the government held off on announcing any new permits and signalled it wanted to move away from fossil
In a statement this morning Ms Ardern said there would be no further offshore oil and gas exploration permits granted.
The industry has said it wants to be consulted before any decision was made.