28 Feb 2022

Act casts shadow over Maari oil field deal

11:11 am on 28 February 2022

An energy sector lobby group says applying the Crown Minerals (Amendment) Act retrospectively to deals done years ago is 'bad public policy'.

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Maari oil field and Raroa floating production station. Photo: Supplied

The Act passed in December is casting a shadow over OMV's $50 million sale of the Maari Oil Field to Jadestone Energy - a deal agreed in 2019.

A second tier oil and gas player, Jadestone announced it had cut a deal to acquire 69 percent of Maari - which is off the coast of Taranaki - in November 2019.

But the deal has become caught up in the government's attempt to prevent a debacle similar to the one at the Tui Oil Field where taxpayers were left with a bill of $300m ever happening again.

Energy Resources chief executive John Carnegie was not impressed with how the passage of the amended Act had been handled.

"It seems an extraordinary thing to have held it up for the passage of a new piece of legislation to then make it apply.

"You know that seems like an extraordinarily bad public policy process if you want me to be frank on that."

Carnegie said the approach had been most unusual.

"You know the standard practice is that you have transition provisions. So, if you have an application [in place] this is standard for the Overseas Investment Act and the Resource Management Act.

"You basically say at the time of the passage of a new piece of legislation if we have applications that have already been lodged we'll actually treat them as they are still under the old legislation."

The Tui field was abandoned in 2019 following the financial collapse of Tamarind Taranaki, leaving the Crown responsible for its safe decommissioning.

The new Act makes it more explicit that oil and gas companies are responsible for decommissioning their assets and introduces penalties if this is not done.

Companies who sell a permit or licence will also now be responsible for its decommissioning in perpetuity, meaning if the current owner fails to meet its obligations they'll be next in line.

Tougher tests for permit acquisitions have also been introduced.

The Maari transaction is currently with NZ Petroleum and Minerals pending final ministerial approval.

OMV declined an interview, but in a statement it took a circumspect view of things.

"With the new decommissioning legislation now in place, there have been changes to the process of assessing the transfer application.

"OMV and Jadestone are currently discussing the impact of the changes with the relevant authorities."

Jadestone chief executive Paul Blakeley was also unavailable for an interview.

In a statement, he said the company remained committed to the Maari deal.

"We are optimistic that the enactment of this new legislation means that the Crown will now be able to focus its attention on our application and that a decision will be forthcoming shortly.

"Given that our application for transfer of operator was submitted to the Crown two years ago, we expect that appropriate attention will now be placed on a timely resolution."

Blakeley said Jadestone was in a strong financial position with $175m in cash on hand as at 31 December, with no debt.

The Ministry of Business Innovation and Employment said the application for a transfer of the Maari permit was still being evaluated and a decision had yet to be made.

It said there was no standard approach as to how existing permit applications were dealt with when legislation changed.

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