New Zealand passes law to reverse oil and gas exploration ban

New Zealand announced on Monday that it will pass laws before the end of the year to reverse an offshore oil and natural gas exploration ban and to take urgent steps to eliminate regulatory hurdles for importing liquefied gas (LNG), amid energy shortages.

The right-of centre government wants to attract investment into the oil and gas industry in the country. This law will end the ban on exploration that has been in place since 2018 outside of onshore Taranaki.

Energy prices have risen to the highest level among developed economies due to severe shortages in the past few weeks, according to Prime Minister Christopher Luxon.

Luxon told a press briefing that "we are responding to a problem New Zealand shouldn't have ever seen" and called on opposition parties to back the bill.

It would be a sensible, common-sense thing to do if the government truly cared about New Zealand’s energy security.

The former centre-left Labour government prohibited offshore petroleum exploration.

The Energy Minister Simeon BROWN said that natural gas production dropped by 12.5% in 2020 and another 27.8% during the first quarter of 2024. This led to a nationwide shortage of energy as generators began to use more diesel and coal to power the grid.

The government stated that renewables such as hydro, solar, and wind could not make up the difference.

Brown stated that "the lakes are low and the sun hasn’t been shining. The wind hasn’t been blowing. We have an insufficient supply of natural gases to meet the demand."

The government will make it cheaper and easier to build, maintain and consent renewable energy generation and electricity transmission and distribution.

Brown stated that the consent and reconsenting period for most renewable projects would be completed within one year. The government will also aim to launch a first round of feasibility permits for offshore renewable energy schemes by 2025. (Reporting and editing by Renju José in Sydney.

(source: Reuters)