Bill lifting oil and gas exploration ban altered before final stages

Wednesday, 30 July 2025

A bill reversing the ban on new offshore oil and gas exploration permits is going through its final stages in Parliament, with some last-minute amendments.

The Crown Minerals Amendment Bill passed the committee stage in Parliament on Tuesday night — when Resources Minister Shane Jones was grilled by Opposition MPs on the late changes — and is expected to receive its third and final reading tomorrow.

To encourage exploration, the Government had originally proposed giving oil and gas companies more flexibility over the arrangements they put in place to decommission and clean up wells once production ceased, through a system known as “trailing liability”.

But that approach has been changed after potential loopholes were identified in the proposed arrangements, in favour of the responsible minister instead having some discretion to manage production companies’ obligations with regard to decommissioning.

The issue has a problematic background.

Former energy minister Megan Woods changed the law in 2021 to ensure that original permit holders could still be held liable for clean-ups if they on-sold wells to companies that later proved unable to fulfil their decommissioning obligations.

That was in response to the Tamarind debacle that has seen taxpayers foot a bill of about $400 million for the clean-up of the Tui oil field, after it was sold to 2019 to Tamarind Taranaki, a company that subsequently collapsed.

But there are strong doubts oil and gas companies have the appetite to resume offshore exploration in New Zealand, and lobbyists have suggested relaxing the current decommissioning rules could make the difference.

Jones had originally proposed the system of trailing liability as a compromise that would mean that if a well was sold more than once, liability could only bounce back to the immediate previous owner.

The Ministry of Business, Innovation and Employment had previously confirmed that would mean responsibility for decommissioning wells could revert to the Crown if the two most recent permit holders were both unable to meet their obligations.

But it is understood additional loopholes were subsequently identified that could have made it easier than expected for production companies to get off the hook for clean-up costs.

Woods said the newly proposed approach of switching from a “statutory” decommissioning regime defined by legislation and managed by officials to one where the minister had “seized discretionary powers” was a big change.

She said the policy intent behind the “amendment to an amendment” had not been adequately explained and queried the role lobbyists had played in the decision.

“What is the causal connection between ministerial discretion and the what he thinks are the desired outcomes?” she asked of Jones.

Jones said there were “guard rails” in the legislation which meant ministers would have only “a certain level of discretion”.

“What this statute does, is it gives an elected politician with a Crown warrant, within the guard rails of this Act, the ability to exercise some flexibility in terms of the final decommissioning obligations.”

No statute and no bureaucrat could know all the scenarios, he said.

“We are not going to truss our economy, corrode the productivity of our economy by denying ourselves access to fossil fuels,” Jones said.

“That is why this bill — every speech I give about this bill — I am hailed and feted by all four corners of our motu.”

Labour MP Damien O’Connor queried whether the approach had been thought through from the Government’s perspective or might backfire on it, given there might in future be a minister from a different party exercising the discretion.

“The minister should be reminded that there are a lot of people working around this country to ensure that there might be a Green minister in 18 months or 20 months,” he told Jones.

“What goes around comes around, and I'd suggest … that to offer certainty, as he's trying to do for the mining sector, for the prospecting and hydrocarbon sector, they need a more robust and consistent process than the whims of a minister.”