Ban on new oil and gas permits lifted but no certainty exploration will resume

Thursday, 31 July 2025

The silver-lining for supporters of the ban is that some believe its reversal may be academic.

The law reversing the ban on new offshore oil and gas exploration permits has been passed by Parliament, fulfilling one of the coalition government’s higher-profile election commitments.

However, doubts remain over the appetite of exploration companies to resume searching for either, at least outside of areas where they already have permits.

Energy Minister Simon Watts said the legislation would “help re-establish New Zealand as a destination for new domestic and international investment”.

But Labour Party energy spokesperson Megan Woods said the change would do nothing to increase the country’s energy security.

The Government was acting on a“hope and prayer” for a fresh discovery, Woods said.

Oil and gas companies had invested more than $1 billion in their existing offshore permits after the ban took effect in 2018 “and they didn't find anything”, she said.

“What we had was those offshore oil and gas operators looking for every last bit they could eke out of the existing fields, and it is not there.”

The exception would appear to be a discovery, which has yet to be appraised, of hydrocarbons at the Toutouwhai well in an existing permit area operated by Austrian oil giant OMV offshore from Taranaki in 2020.

Energy Minister Simon Watts says the argument that reversing the ban would not yield new gas for a decade was “a distraction”.

“What we saw even before 2018 was a large number of companies leaving New Zealand because they were not finding oil and gas in commercial quantities,” Woods said.

Former National Party energy spokesperson Stuart Smith appeared to acknowledge months before the election that overturning the ban might be more symbolic.

National intended to reverse the ban “not because we think that there'll be a rush of oil rigs coming over the horizon” but rather to rehabilitate the country’s investment reputation, he said.

A spokesperson for OMV said it “currently had no plans to develop Toutouwai or any other prospects at this stage”.

Watts told Parliament that the argument reversing the ban would not yield new gas for a decade was “a distraction”.

“The immediate signal this bill sends to investors is critical now,” he said.

“It encourages immediate investment in long-term exploration and in maximising production from our existing fields, which can deliver benefits far sooner.”

Green Party MP Steve Abel said the Government was “trying to resuscitate a zombie that will not come back to life” by earmarking $200m for co-investment in new exploration.

“That money would be much better spent on renewable energy. Clean energy, solar power and onshore wind are markedly lower cost than oil, gas and coal, and they give us greater energy security,” he said.

Debate on the bill earlier in the week in Parliament centred on a last-minute amendment that would give current and future energy ministers some discretion over the obligations production companies would have to decommission and clean-up wells when they were at the end of their life.

Woods said the Government had misunderstood the implications of that change, which could have “the opposite effect of the Government’s desire”, given the potential for future changes of government.

John Carnegie, chief executive of Energy Resources Aotearoa, most of whose members have interests in the oil and gas sector, said the law change should help rebuild investor confidence.

“Even a limited chance of new investment is better than none – especially when it comes to securing the domestic natural gas we need for a reliable and resilient energy system,” he said.