20 Sep 2010

NZ accused of wasting millions from oil exploration

6:56 pm on 20 September 2010

New Zealand has been accused of wasting petroleum revenue it earns from oil drilled offshore on meeting daily costs when it could have been saving it up for a rainy day.

The comments came at a petroleum conference in Auckland on Monday.

For years, New Zealand has put petroleum revenue into general government funds and royalties brought the Government almost $400 million in the year to June.

But Californian funds manager William Buechler, who deals with New Zealand and Australia, says putting petroleum revenue into general government funds is a mistake.

Mr Buechler says New Zealand has failed to look after its oil revenues carefully enough and it needs to made a decision urgently on what to do with the revenue long before the Government's hoped-for breakthrough in oil and gas exploration takes place.

Mr Buechler says Britain has little show today for its North Sea oil industry, while Norway has built up assets worth $US500 billion.

A senior Norwegian oil consultant, Faroul al-Kasim, told the conference that wealth built up from oil money means the recent financial crisis was hardly noticed in his country.

Strong economy needed - Brownlee

Energy and Resources Minister Gerry Brownlee has fired a shot at environmental groups seeking to block the development of natural resources, arguing they risk making the environment worse, not better.

Mr Brownlee told the conference that economic development is essential for protecting the environment, as a strong economy provides money for biodiversity, improved water quality, insulating houses and protecting endangered species.

He went on to say there is a correlation between economic growth and protecting the environment, and the poorest nations are often the most polluted.

But an environmental economist says Mr Brownlee's comments about the need to develop the petroleum sector are a disgrace.

Cath Wallace, of Victoria University, says ideas linking economic development with advances in saving wildlife have been discredited.

Ms Wallace says Mr Brownlee's approach would amount to trying to get a better environment by getting richer by destroying the environment.

She says a better quality of life will not come from digging up minerals and building more smoke-stacks, but from a different development path which reduces the economy's reliance on fossil fuels.