WELLINGTON (Reuters) – New Zealand said on Thursday that it would not issue new permits for offshore oil and gas exploration, surprising the industry with a decision that would drive overseas investment.
The left-led government said the move would not affect the country's 22 existing exploration permits, and all oil and gas discoveries by companies holding these licenses could still lead to mining permits of up to 40 years.
Prime Minister Jacinda Ardern, who was heavily involved in preventing climate change in the run-up to the tight elections, said the decision was a responsible move and guaranteed security for businesses and communities.
"We strike the right balance for New Zealand – protecting the existing industry and protecting future generations from climate change," she said.
However, one of the country's largest energy companies, New Zealand Oil & Gas, said it had not been warned about the decision.
"We note that the announcement is a sudden change in policy that has not been consulted and appears to conflict with the government's election promises," a statement said.
The company, whose shares fell 3.2 percent, said the move would have no immediate material impact on its financial position and will continue with existing projects.
However, it would address the risks of changing policy by investing in exploration and production facilities in other jurisdictions.
New Zealand generally runs an annual tendering process to issue permits for the exploration of oil and gas deposits, mainly in the high-energy northeastern Taranaki region. But interest has declined in recent years due to lower global oil prices.
In 2017, only one license was granted compared to 10 in 2013.
The government said Thursday that permits for finding onshore oil and gas reserves would continue.
The Ardern government, which has a support agreement with the Green Party Green Party, ended nearly a decade of center-right national rule last October.
Jonathan Young, Energy and Resources spokesman for National, said the approval decision had no justification.
"It certainly has nothing to do with climate change, which will shift production elsewhere in the world, not reduce emissions," he said.
Coverage by Charlotte Greenfield, editors of G. Crosse and Richard Pullin