An Australian website that covers the resources sector in Papua New Guinea said PM Jacinda Ardern’s suspension of new offshore licensing in New Zealand was unlikely to have immediate impact on oil or gas sector.
PNG Resources, which also produces a magazine, said the international analytics firm GlobalData said though the Labour-led NZ Government suspended issuing new offshore licences, it was unlikely to have an immediate impact on the oil or gas sector.
It signals the possibility of increased restrictions in the future, PNG Resources said.
GlobalData oil and gas analyst Jonathan Markham said the recent announcement did not affect existing exploration and production permits, but created “uncertainty about whether upstream investments will be economically practical if current licenses are not extended or re-awarded in the future.”
Currently, the NZ Government has only suspended grants for new offshore exploration licences. The announcement included a pledge to honour all current licences, though PNG Resources said this was not a binding agreement.
“This means that the current Government could impose further restrictions or a new Government with a different outlook could overturn the suspension very easily,” PNG Resources said.
The ban was seen as limiting the immediate impact on existing projects, but interest in offshore New Zealand had waned over the past few years.
Since 2016, international oil companies, including Shell, Statoil, and Anadarko Petroleum, have moved towards exiting the country and the latest Government policy was likely to further discourage companies from new investments
Jonathan Markham said the lack of interest in offshore New Zealand has primarily been driven by investment cut backs since the oil price crash in 2014 and poor results from recent exploration drilling.
“The previous New Zealand government had been attempting to attract upstream investment and grow the offshore oil and gas sector, but the move by the new Government is likely to compound the lack of interest,” he added.
PNG Resources said there were 21 existing offshore exploration licenses, with 15 valid until 2027 to 2030, allowing participants to potentially conduct geological surveys and exploration drilling for over a decade.