Prime Minister says offshore oil permit ban legislation offers 'complete certainty' to industry
Monday, 29 October 2018
New Zealand's oil industry is urging the Government not to rush through a law change which the Prime Minister says is being passed quickly to allow new oil exploration permits to be offered.
On Monday the environment select committee issued its report on the Crown Minerals (Petroleum) Amendment Bill, with the Government majority of the committee recommending only minor changes to the text.
The legislation would give effect to the Government's April 12 announcement that it will cease offering new offshore oil exploration permits. Permits will be offered in Taranaki for three more years, but may not be continued beyond that.
The legislation is due to go through the committee stages on Thursday and is expected to have its third and final reading next week, after a truncated public submission and select committee process. MPs refused a request to hold hearings in New Plymouth, the home of the New Zealand industry and submitters who did appear were cut off after 15 minutes.
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On Monday, Ardern told reporters that the reason for the short public submission was in order to pass the legislation to enable the Government to run the block offer 2018 process, in which exploration permits in onshore Taranaki will be offered to the industry.
'This is now a process we're going through in order to allow the block offer 2018 to go ahead. That's something, obviously, that we want to make sure that we progressed this calendar year. That's why we're going through this process now.'
A spokesman for Energy Minister Megan Woods has confirmed that even under the Government's timetable, block offer 2018 will in fact be undertaken some time in 2019.
Ardern did not once mention the ban on offshore permits in her press conference.
'We are giving certainty to those who currently hold permits and those who would be seeking an onshore block offer that we will honour the commitments around those permits,' Ardern said, dismissing claims that there may be a lack of interest given uncertainty created by the decision.
'Actually, what we are looking at here is giving greater certainty, rather than year on year, around the onshore offers, than they otherwise would have,' she said.
During the select committee process, the Government faced warning that the uncertainty created by the decision was behind a fall in business confidence and had made New Zealand a riskier place to invest in the eyes of both overseas and local investors.
Cameron Madgwick, chief executive of oil and gas industry body Pepanz urged the Government not to rush the legislation, something he had written to the select committee on and raised during his submission.
'It's very much our preference to have a good process rather than a fast process, and we would prefer to have that over a block offer this year,' Madgwick said.
'The Government can be under no illusion that it's for the industry's benefit that the block offer needs to be held in 2018.'
'If there are outstanding questions about whether this is going to reduce emissions, whether it is going to have an impact on regional New Zealand, and whether it is going to have an impact on the cost of living of New Zealanders, surely taking some time to get expert independent evidence to that effect is what should be done.'
During his submission to the select committee, Madgwick said if MPs in the Government were proud of the decision they were making, they should welcome scrutiny of it, rather than rushing it through.
'If you're not prepare to hold it up to that scrutiny, perhaps that's the reason you're rushing it through,' Madgwick said.
The Government has been claiming for some time that it was rushing the legislation through in order to allow a new block offer, however its reasoning was immediately questioned by critics.
A day after Energy Minister Megan Woods announced the timetable, Woodward Partners analyst John Kidd said the real reason was to try to stifle argument.
'Given that it is no longer possible to complete Block Offer 2018 until early/mid 2019 this reasoning is in our view disingenuous and serves only to mask the true objective of seeking to minimise public discussion and critique.'
Minor changes only
The environment select committee's report proposed only 'minor changes' to make the bill clearer.
'This bill is one of several initiatives that seek to aid New Zealand's transition to a low-carbon economy in line with the country's international commitments,' the Government majority said in its commentary on the bill.
The decision has been lauded by environmental groups, but has attracted considerable criticism.
Almost two months after the decision was announced, the Government revealed that Cabinet had little involvement in the process, with the leaders of the Government parties instead reaching a political agreement, without seeking advice on the likely impacts.
When the official advice of the Ministry of Business, Innovation and Employment was finally released in September, it showed officials warning it could cost the New Zealand economy millions of dollars while potentially having a negative impact on global carbon emissions.
During the select committee hearings, representatives from the oil and gas industry warned the decision had harmed business confidence and had raised the sovereign of New Zealand in the eyes of investors.
In a minority view, the National Party members on the select committee said the party opposed the Government's 'policy and process at every level' of the decision.
'We believe it is essential to reduce emissions but see that the Government have shown great negligence to proper process around developing policy and progressing it for the betterment of New Zealand.'
National vowed to reverse the decision to ban new offshore exploration 'as we believe it is poorly planned, will not achieve emission reductions, but potentially increase them'.
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