To strengthen energy security, New Zealand intends to pass a law by the end of 2024 to lift the ban on offshore oil and gas production that has been in place since 2018, the government said on Monday.
The Cabinet has committed to taking urgent action to lift the ban and, as a stopgap measure, to remove regulatory obstacles to the construction of urgently needed liquefied natural gas (LNG) import facilities.
New Zealand also plans to ease restrictions on power transmission companies that use electricity generation and improve electricity market regulation, the government said in a plan of action set out in an urgent action plan to improve energy security.
Earlier this year, the coalition government announced that it would introduce a bill in Parliament in the second half of 2024 to lift the ban on oil exploration beyond mainland Taranaki. This bill is part of a series of proposed amendments to the Crown Minerals Act.
New Zealand’s natural gas production fell 12.5% in 2023 and a further 27.8% in the first three months of this year, causing a nationwide shortage, according to government estimates. This has led to a decline in manufacturing output, while power generators have had to use more coal and diesel to power the grid.
“New Zealand is currently experiencing an energy shortage. The lakes are low, the sun isn’t shining, the wind isn’t blowing and we don’t have enough natural gas to meet demand,” Energy Minister Simeon Brown said in a statement.
Inadequate energy resources have driven up wholesale electricity prices, which is “devastating for our manufacturing and export sectors and unfortunately leading to companies having to reduce production or close altogether,” Brown added.
Resources Minister Shane Jones noted: “Oil and gas explorers need to have the confidence to invest here, knowing that they will play a key role in New Zealand’s energy sector now and in the future.”
By Tsvetana Paraskova for Oilprice.com
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