New Zealand to Reverse its 2018 Offshore Oil Exploration Ban

New Zealand’s government is moving to reverse a ban on offshore petroleum exploration, part of a suite of proposed amendments to the country’s Minerals Act. In a statement on Sunday, Resources Minister Shane Jones said that the reversal of the ban is targeted at resolving energy security challenges posed by rapidly declining natural gas reserves.

New Zealand issued a moratorium on new offshore oil exploration permits in 2018, during the Labor Coalition government of former Prime Minister Jacinda Ardern. While environmental groups at the time hailed the decision as a historic victory, the opposition parties led by the National Party (now the ruling party) described the ban as economic vandalism. Reversing the ban was an election pledge of current Prime Minister Christopher Luxon.

The Minerals Amendment Bill will be the latest piece of legislative reform introduced by the government aimed at revamping the energy sector. The Bill will be introduced to Parliament in the second half of this year. Recently, the government also introduced the Fast-track Approvals Bill, which is seen as an incentive for renewable energy investments. The bill has provisions such as one-stop-shop approvals, allowing energy projects to obtain a wide range of environmental and planning permits in one process.

“Our job as the Government is to provide the right policy settings to enable the sector to get to work, and that’s exactly what we are aiming to achieve through these amendments. New Zealand cannot ignore the significant economic contributions the petroleum and resources sector delivers,” said Shane Jones.

New Zealand government estimates that the petroleum and mineral sectors contributed nearly $1.2 billion to its GDP in 2020-21 and $144 million in government revenue in 2022-23. Extra natural gas projects will help plug electricity generation gaps for intermittent sources such as wind, solar and hydro, the administration said.

The minerals bill also seeks to change how petroleum exploration permits are allocated. Currently, permits are awarded through a competitive tender process. The bill proposes allowing the choice between a tender and a non-tender (called priority in time) method.