The New Zealand media had a focus yesterday on Prime Minister Jacinda Ardern being at the United Nations with her baby daughter in tow and on business commentators raising again the lack of financial nouse behind the Government’s ban on new offshore oil permits and launching legislation for this.
Eamonn Sheridan of Foxlive said figures showed the oil ban would cost the Government $7.9 billion in revenue based on Ministry of Business, Investment and Employment (MBIE).
The same data was also raised by veteran business observer Pattrick Smellie of BusinessDesk who said this revenue could be lost on new offshore permits between now and 2050.
Smellie said the estimate accompanies the long-awaited release of Crown Minerals Act amendments required to put the ban in place.
Energy Minister Megan Woods, who released the Crown Minerals (Petroleum) Amendment Bill to Parliament on Monday is disputing the figure used by MBIE and echoed by some commentators.
She claimed it is practically impossible to make a credible estimate about oil and gas discoveries that have not been and can never be made.
She is also questioning MBIE's decision to assume that there would either be no oil and gas finds or no commercial development of finds made in the 100,000 square kilometres of offshore territory still covered by permits already granted, but still awaiting exploration efforts.
Smellie said the MBIE modelling, which was quality-checked by Treasury, gives a huge range of possible outcomes, saying foregone revenue could be as little as $1.2 billion or as much as $23.5 B.
Lost oil company profits are separately estimated to fall within a range of $199 M and $7.3 B.
BusinessDesk said this week oil industry critics of the April 12 ban decision to end offshore oil and gas exploration have been predicting for months that official advice would fail to back the Government's controversial decision, which was a major win for the Green Party and the clearest possible signal that the Government wants the New Zealand economy to accelerate its transition to a low-carbon emissions economy.
However, the MBIE regulatory impact statement says only that the policy "may" contribute to the government's climate change action goals.
BusinessDesk said that also embarrassing is the fact that the amendments are now so late that the 2018 Block Offer for onshore exploration permits cannot begin until January 2019. The process normally concludes before Christmas each year.
Media reports yesterday also warned the guaranteed security of gas and electricity supplies in NZ could be reduced and could jeopardise power prices.
MBIE reportedly warned that the Government ban could also raise global greenhouse gas emissions if production of oil and gas goes to “countries that have higher emissions footprints” and investments that might have occurred in New Zealand may not proceed.
Stuff news service said Megan Woods amendment bill was tantamount to an attempt to avoid the risk of being sued by international oil services companies, though the Government has claimed that risk is low. The Ministry’s statement not only indicated there may be folly on greenhouse emissions by more imported oil but that there was a chilling effect on investment elsewhere in the sector.
The oil industry lobby Petroleum Exploration and Production (PEPANZ) homed in by claiming there was time for a rethink on plans to end new offshore exploration.
PEPANZ claimed the “staggering” new data showed ending offshore oil and gas exploration could cost NZ taxpayers up to $23.5 billion and increase emissions at the same time.
PEPANZ chief executive Cameron Madgwick said: “The Regulatory Impact Assessment (RIS) shows that ending new offshore permits is a disastrous policy for New Zealanders, likely to cost the Crown $7.9 B in lost revenue and potentially up to $23.5 B.”
“Importantly, this is only a part of the picture. Company profits could also reduce by billions which will cost jobs and investment into NZ, and the wider economic costs have not even been modelled.
“As well as the lost revenue it will mean higher energy prices for NZ homes and businesses, increasing the cost of living and destroying jobs.
“Over the last few months we’ve heard increasing concerns from New Zealanders over the impacts of this policy and we will be strongly advocating for those voices to be heard.”
Meanwhile, Jacinda Ardern in New York told the UN of a pledge to help Pacific nations to the tune of $300 M on energy and lifetime improvements, with her climate change crusade (for one of the world’s least polluting country) the big bogey.
Sources: foxlive.com/news; businessdesk.co.nz; stuff.co.nz; Xinhua.com