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6/6/2018 — Oil and Gas
Government by climate change dogma

Fairfax Media reported yesterday that Cabinet has made no decision on ending oil exploration, according to just-released documents, with April's controversial no new offshore permits made on the basis of a political agreement between the coalition parties.

Reporter Hamish Rutherford said that on April 12, Prime Minister Jacinda Ardern led a group of ministerial colleagues into the Beehive theatrette to confirm news that the Government decided it would offer no new offshore permits for oil and gas exploration, with onshore permits offered in Taranaki for as little as three years.

Though the news was delivered by ministers affected by the decision and in a forum usually used to discuss decisions made by the Cabinet, politicians made the decision in their roles as party leaders.

The Government was now releasing a series of documents generated in the making of the oil and gas exploration decision, but it has already confirmed to Fairfax that no Cabinet paper was created and that the Cabinet has not voted on the matter.

“There was no Cabinet decision,” a spokesman for Energy Minister Megan Woods said.

“The decision not to offer future offshore oil and gas exploration permits was made between the three coalition parties, and the Minister (Megan Woods) was simply notifying Cabinet of that decision as well as noting that future cabinet decisions would be required to implement that decision.”

The spokesman added that there was no requirement for the Cabinet to make a decision, but a Cabinet paper would be developed on implementing the decision.

Fairfax went on to report: “Officials are currently drafting advice on implementing the offshore decision and alongside this work, we've also begun discussions with industry about protecting rights of existing permit holders.”

National leader Simon Bridges described the process as “governing by decree” making decisions which would affect the productive sector without properly considering the impact.

Bridges said: “It's certainly no way to govern.” He had suspected there had been no Cabinet paper on the decision. Bridges, a former energy minister, said he had been told by officials that they were expressly instructed not to provide advice.

The Opposition accused the Government of hastening the decision to allow Ardern to announce it on the eve of her departure for a high profile trip to Europe. Ardern flew to Paris the day after the oil and gas decision was made.

Meanwhile the international petroleum sector publication Upstream reported that companies which had conducted seismic testing on a speculative basis were planning a legal challenge to the Government's decision, probably led by the Texas-based International Association of Geophysical Contractors.

The Government has not yet notified any proposed legal challenge from the industry body.

The website Sharechat said yesterday that Government axed granting any future offshore oil and gas exploration licences without a formal Cabinet paper and with minimal analysis from officials, according to a dump of documents and emails from Energy and Resources Minister Megan Woods.

The news service BusinessDesk which provided a report to Sharechat said these documents had been widely sought under the Official Information Act. BusinessDesk's application asked for Cabinet paper or papers that supported the decision, as would be usual for a decision affecting a multi-billion industry with long-lived assets and employing several thousand people.

There was none.

Instead, Sharechat said, an oral discussion occurred and was noted in a Cabinet Minute of April 9, which relied on Woods's delegated authority under the Crown Minerals Act 1991 to make decisions about whether and where to offer future parcels of exploration acreage.

The decision was announced publicly on April 12.

Minister Woods said yesterday that the Cabinet decision was “the culmination of exhaustive consultation between the Coalition partners and senior Ministers which started in December 2017 immediately after the announcement of that year’s block offer.

“Despite the fact it was an oral item, there was more discussion than most items with written papers. The decision was a political decision, looking out 30 years and taking steps towards 2050 being emission neutral. This is a signal about the future.”

On the issue of possible legal action, Sharechat reported that with no future release of new offshore exploration territories, the commercial value of seismic survey and other data collected by such companies is now questionable.

Upstream, reported on June 1 that affected firms include WesternGeco, a subsidiary of the global geophysical research firm Schlumberger, Houston-based Petroleum Geo-Services, and Norwegian TGS, with any legal action likely to be coordinated by the International Association of Geophysical Contractors (IAGC).

Upstream quoted IAGC president, Nikki Martin, as saying the Government's decision had undermined the sector's confidence in NZ as an investment destination and that “IAGC members are still considering avenues to realise a return on their significant investment.”

Sharechat said NZ Petroleum & Minerals has long encouraged acquisition of seismic data ahead of exploration licences being granted, with such activity regarded as essential to promoting oil and gas production in NZ. The previous National Party-led government championed that approach early in its nine-year term, though falling oil prices saw interest in offshore exploration dwindle from about 2014.

Sources: stuff.co.nz; Sharechat.co.nz & businessdesk.co.nz

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