Oil and gas businesses were shocked by the news today that New Zealand’s Labour government chose to ban future offshore exploration. The South Pacific nation is one of the first in the world to take such drastic, short-sighted measures, joining France, Belize, and Costa Rica.
“There will be no further offshore oil and gas exploration permits granted,” commented New Zealand Prime Minister Jacinda Ardern. “We must take this step as part of our package of measures to tackle climate change.”
Before Ardern and the Labour party took office, New Zealand’s conservative government prioritized oil and gas futures. Off the shore of the small island country is the world’s fourth-largest maritime exclusive economic zone. Companies such as Shell, Chevron, and Statoil have already invested resources in exploring for oil and gas resources in this area.
“Huge investments have been made by companies already anticipating offshore block offers which have now gone to waste and people’s jobs will be affected,” said Cameron Madgwick, chief executive of the Petroleum Exploration & Production Association of New Zealand (PEPANZ). “It sends a worrying message to domestic and international investors on how open New Zealand is as a place to invest and create jobs.”
Of the 31 active oil and gas exploration permits in New Zealand, 22 of them are offshore. The policy change from Ardern will not affect these permits until 2030 at the latest. While the South Pacific country is a relatively small oil and gas producer, the ban signifies a massive change that will dramatically impact its national economy.
“The Government had promised to consult but have now made an abrupt decision to stop any new offshore exploration,” said National Opposition energy and resources spokesman Jonathan Young. “So in 10 years time, we will be buying imported gas to fire up the barbecue. What will replace gas as the demand for more electricity rose with electric vehicles and we don’t have enough renewables. It will be coal – good one Government.”
By banning the exploration for oil and gas opportunities offshore, New Zealand is putting hard working citizens out of work and forgoing lucrative tax revenues that could support valuable social programs. Reports say that Ardern’s administration did not consult oil and gas industry leaders, indicating how little the leading party cares about ensuring a sound financial future for its country. Hopefully, this ban is reconsidered and amended to keep people employed, at the very least.