Energy Minister says onshore block offer is enough to fend off legal threat from oil industry

Energy Minister Megan Woods has .been advised that the 2018 block offer, which will offer three onshore Taranaki blocks ...
ROSA WOODS/STUFF

Energy Minister Megan Woods has .been advised that the 2018 block offer, which will offer three onshore Taranaki blocks to oil exploration companies, is enough to meet the legal test of avoiding a breach of the Crown Minerals Act.

Energy Minister Megan Woods is playing down the risk of being sued over a ban on new offshore exploration permits, saying legal advice backs the decision.

Rumours have been circulating for weeks that the industry may take legal action over the April 12 announcement, with speculation mounting when industry publication Upstream published a report, quoting unnamed sources, claiming offshore seismic operators were considering a challenge.

The new policy will see onshore blocks in Taranaki offered for the next three years, with no new blocks offered offshore.

Under the Crown Minerals Act, the Government has an obligation to promote exploration, as a means of creating a stable investment environment, but Woods said the decision to offer new onshore permits for the next three years covered that obligation.

READ MORE:
No Cabinet paper written, no Cabinet decision made, in 'political decision' to ban new oil exploration
* Government moved to end offshore oil exploration
Ardern says Government 'actively considering' call to end oil exploration
Jacinda Ardern says 'everything' is on the table in decision on oil exploration

"We have received advice in terms of our obligations under the Crown Minerals Act, in terms of the ability of people to sue," Woods said.

"We did carry out a block offer in 2018; the obligation under the Crown Minerals Act is to promote the exploration of various minerals, and oil and gas, and we are doing that. We currently have out for consultation, at the moment, an onshore offer" for oil and gas exploration, Woods said.

This covered the Crown's obligations.

"The process for block offer isn't something that's defined in the act. It's a process that was brought in in 2012, by the previous government. There is nowhere in the Act that defines how often that acreage has to be offered up. There's nowhere in the Act that defines whether it has to be onshore or offshore."

Asked if she was satisfied by the legal advice that the decision would not be successfully challenged in a judicial review, Woods responded: "Yes."

Ad Feedback

The report in Upstream claimed the International Association of Geophysical Contractors "will lead any legal response", but in a statement the Texas-based organisation said it was its members which were assessing the issue.

"The IAGC is unaware of the sources who allege we are leading a legal challenge," the organisation said in a statement.

" IAGC members are still considering avenues to realise a return on their significant investments in New Zealand's energy security," the statement continued.

"The geophysical and exploration industry rely on consistent and transparent policy decisions by governments. An arbitrary end to exploration disrupts business certainty, as major investments in New Zealand have already been made by companies with a reasonable expectation of future activities."

The issue appears to centre around work which the seismic companies undertook on a speculative basis, in the hope of selling it to exploration companies in the future. In areas not covered by existing oil permits, the value of the data could be zero.

National MP Jonathan Young, the MP for New Plymouth, where much of New Zealand's oil industry is based, said he had heard of the possibility of legal action.

"The challenge is around breaching the CMA [Crown Minerals Act], that is supposed to not be breached in order to create a safe platform for investment around the sovereign risk issue," Young said.

"I reckon there's probably multiple reasons why a legal case could could have some traction."

Young said that the loses by some companies were in some cases significant.

"We all know that Schlumberger lost $150 mil[lion]," Young said. Schlumberger has not responded to requests for comment.

Young believed an international player may be prepared to lead the legal challenge.

"These are people who don't have the same sentiment as New Zealanders. The only thing, it'll look like big oil coming to take on the righteous government."

 - Stuff

Comments