Last-Minute Change Puts Oil and Gas Cleanup Decisions in Ministers’ Hands

By Russell Palmer

In a surprise move, the New Zealand government has announced a last-minute amendment that shifts the responsibility for oil and gas field decommissioning from legal processes to the discretion of two ministers. This change, published at 5pm on Monday, leaves opposition MPs with less than 23 hours to prepare for the debate.

The amendment alters the rules for decommissioning oil and gas fields, including who is responsible for paying for the cleanup. This follows the controversial Tui oil field cleanup in Taranaki, which cost taxpayers $293 million after the Malaysian owner, Tamarind Taranaki, went bankrupt in 2019. The government initially set aside up to $343.4 million for the project.

Resources Minister Shane Jones has been a vocal advocate for restarting the oil and gas industry. He claims the amendment resolves a loophole in a 2021 law designed to prevent the government from being burdened with such costs in the future. "It did not seem correct or moral that the Crown should be left with that liability and the people [at fault] - with some very shrewd manoeuvrings of script - would escape liability. We have solved that problem," he said in Parliament.

The changes replace the process of identifying previous permit-holders responsible for decommissioning with a new system where the Resources and Finance Ministers have the final say. This has drawn criticism from Labour's Energy and Resources spokesperson, Megan Woods, who accused the government of yielding to industry pressures. "They have bowed to the suggestions of the oil and gas companies and done what they wanted," she said.

Labour MP Deborah Russell highlighted the lack of consultation with stakeholders, including iwi. "Those consulted preferred ministerial discretion to the current act and approach in the bill. In other words, these shadowy participants in the oil and gas industry - a dying industry - who we don't know who they are, much prefer to be able to lobby a minister," she said.

Jones defended the limited consultation, stating that engaging with stakeholders, including the oil and gas industry, was necessary. He also claimed that the Māori dimension of the issue was addressed through his own involvement in the process.

The amendment passed with the support of coalition parties, but opposition parties strongly opposed it. The third reading, which would see the oil and gas ban repealed, is expected on Thursday. However, a gas company has warned that without broad political consensus, investors may be hesitant to return to New Zealand.

The government has also set aside $200 million in this year's Budget to co-invest in new gas fields. This follows the government's recent decision to pull out of the Beyond Oil and Gas Alliance, a move criticized by the World Wildlife Fund as an "international embarrassment."

As the debate over the future of the oil and gas industry intensifies, the question remains: will this shift in power lead to a revival of the sector or further environmental and economic controversy?