10 Jun 2024

How the government plans to give certainty to gas investors

8:28 am on 10 June 2024
Shane Jones

Minister for Resources Shane Jones worries more manufacturing will move out of New Zealand because of uncertainty about energy. Photo: RNZ / Samuel Rillstone

The government will look at ways to set up long-term security for investors, when it reverses an oil and gas ban, the Resources Minister says.

But Labour says the changes would lock in emissions for decades to come.

Investors were scared to return to the market in case of a ban by another government and long-term contracts could be a solution, Shane Jones told Morning Report on Monday.

The 2018 ban on gas and oil exploration in New Zealand "damaged the perspective that international investors and domestic investors have about our nation", Jones said.

"One option is to work with the users of gas and develop a long-term take contract so that investors have the confidence over the next 30 years.

"I did promote the notion - is there some way of developing a bond to reduce the risk?"

He said domestic investors were "fearful a current government might cancel their rights" and there was a need to "secure energy, consistency and security for our nation".

"I do feel that a long-term contract has some merit. The government would need to work assiduously with the users of gas," Jones said.

"I'm very anxious that we don't lose more manufacturing and industry out of New Zealand because of uncertainty about energy.

"One Parliament cannot bind another Parliament, but all parliaments will respect the sanctity of long-term contracts. And I think if the developers in the new frontier of gas boosting see that they've got an enforceable long-term contract with a bunch of users, the there'll be no way that the green politburo can destroy the New Zealand economy again."

The reversal of the ban was a step "backwards" in Aotearoa's climate response, Labour Party energy spokesperson Megan Woods said.

Woods introduced the ban as energy minister in 2018.

"This will lock in emissions for decades to come. We are in a transition but a transition is not just maintaining the status quo and continuing to burn fossil fuels for our energy, it is about moving towards something different."

She said the government's policy gave fossil fuel companies free rein to exploit the environment.

But Jones said a change in legislation would come with financial liability for investors.

"This time around there'll still be a financial liability on all of the investors in the gas industry. It'll have more flexibility.

"Regulations will be passed. Liability will still rest with those who have invested, dug, and extracted the gas from the various wells."

It was about taking a "balanced" approach, he said.

"We are committed to expediting or not only the oil and gas, but also encouraging accelerating the process for people to create more wind farms, solar energy power generation capacity.

"But it requires the fast-track legislation because it takes far too long in New Zealand to get these bog-standard permits allocated."

Industry group Energy Resources Aotearoa was thrilled the ban was being lifted.

A secure gas supply would support the transition towards renewable energy, chief executive John Carnegie said.

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