Source: New Zealand Government
I am delighted to be here in Singapore once again, to speak to you in my capacity as New Zealand’s Minister for Resources and Associate Minister for Energy.
If you haven’t heard of me before today, I’m proud to declare myself the champion of New Zealand’s petroleum and minerals sector.
I want to thank the Energy Council for asking me to speak with you today on the significant changes that have happened in my country and what is still changing now.
I’d also like to take a moment to acknowledge some of our growing oil and gas producers here today, such as Wai-Lid Wong from Matahio, who can attest to the positive changes I’m going to talk to you about this morning. And we also have Richard Beament from Horizon Oil here with long-term joint venture investments in our gas fields.
Thank you gentlemen for the part you are playing in continuing to grow this sector in New Zealand.
The coalition Government I am a part of is injecting life back into New Zealand’s economy through increased foreign investment, trade, regional development, and energy security.
The strategic and responsible development of New Zealand’s oil and gas resources presents us with a significant opportunity.
A productive oil and gas sector is critical to ensuring enough gas to keep our lights on, the economy growing, and keep de-industrialisation at bay. As a food bowl for Asia, I believe we need to keep investing in gas for all its uses.
New Zealand has a well-established, innovative and highly skilled oil and gas sector on the West of our North Island in the Taranaki region and we wish to keep it that way.
Our Government sees reliable ongoing gas production contributing to our national self-sufficiency and domestic resilience and a critical part of our export-led recovery.
Our gas reserves data tells us a concerning story, but introduces opportunity for the sector. I intend to leave no stone unturned to ensure all our current and future energy sector participants have the confidence and see the right market incentives to keep our businesses operating and growing.
I’ll be the first to reflect and acknowledge that confidence in our gas sector took a significant hit when the petroleum exploration ban was introduced in 2018. The ban impacted investment in our producing fields and barred new exploration.
As a country we have seen the impact of this. We have listened, we have heard, and we are changing it now.
This is why I am advancing two critical policies in legislation right now – to help secure our short and mid-term energy future as we transition towards more renewable energy forms.
I am reversing the ban on offshore oil and gas exploration, and changing settings to make sure we are balancing Crown risk in decommissioning, while not disincentivising ongoing investment in our existing fields.
As part of this we are giving the oil and gas exploration market a new Open Market Application process meaning all acreage is open for application, and you’re not restricted to block offers.
I am pleased to tell you today that the Government has set aside $NZ200 million to become a cornerstone investor in new gas projects. These will be business case-based with a likely government stake of up to 15 per cent for each successful project.
This will make our Government a contracted partner in the project.
Having skin in the game as a cornerstone investor demonstrates our own commitment to meeting our future gas needs. If we really want to address the current reality that we rely on imported coal, not domestic gas, to get through winter, we must be prepared to stand alongside our petroleum sector as a co-investor.
We see this as a strong signal to make it clear to foreign investors, explorers, and producers, that New Zealand is leaving the past behind and wants investment in new petroleum opportunities.
But, although there is still much to do on the West Coast, we don’t want you to constrain your thinking to just that part of our beautiful country. New Zealand has frontier offshore basins off the east coast of both Islands. We have the East Coast basin, Canterbury basin, and the Great South Basin. For these there are existing open geodata sets with our regulators and companies such as SLB, here with us, who have still confidential commercial exploration data available to you.
As well as the $NZ200m, the Government has announced a raft of other changes that will get New Zealand back on track and open for business.
What we have seen peak interest around the world is our innovative Fast-track Approvals Act passed last year. This provides an approvals pathway for cutting red tape, but not cutting corners, and projects of regional or national significance to be approved in months, not years.
In our recent Budget, we announced Investment Boost – a 20 percent first-year capital depreciation policy, this is in addition to normal accounting depreciation standards and is in effect now.
This supports our already attractive tax expense claim, depreciation, and royalty rebate regime settings supporting you run your business, and contributing to the cost of decommissioning at project end of life.
We are overhauling our Overseas Investment Act. The reforms shift the Act’s focus to emphasise economic benefits, replacing the presumption that foreign investment is a privilege. Most applications—excluding residential land, farmland, and fishing quota—will now be processed within 15 days.
We are in the process of entirely rewriting our Resource Management legislation. Introduced in 1991 it was world-leading for the time in managing our natural and physical resources and replaced over 50 previous pieces of legislation. However, after 34 years this legislation is no longer fit for purpose and we appreciate how it’s holding back investment and development in every sector, including residential building. We will see this reform completed in this term of government, and until then the Fast Track Approvals Act supports projects get started today.
I am also interested in maximising the potential of our geothermal and natural hydrogen resources.
New Zealand has long been a user of geothermal energy. It currently makes up nearly 20 percent of our electricity generation. But we see so much more potential with new technology in super-critical and other next-generation geothermal.
We have ringfenced $NZ60 million for pre-feasibility of next generation geothermal and we expect to see exploratory drilling next year.
Unlike many renewable energy sources, geothermal energy provides critical continuous baseload energy and electricity generation. This is particularly important in the context of our energy security challenges.
We will have a geothermal strategy completed by the end of this year.
We are blessed with a geology permissive to the production of induced Orange Hydrogen, as well as natural ‘White’ Hydrogen prospects. Right now, regulators are undertaking public consultation on our country’s hydrogen policy settings, and we expect to see considerations for Cabinet later this year.
So, as you’ve heard the changes our Government has introduced or that are passing through Parliament right now will:
- reverse the oil and gas exploration ban entirely
- start a new open market application process for any acreage you see as prospective
- address petroleum decommissioning requirements to align us with best practice
- share risk through government co-investment through our $NZ200m fund
- make for fast project consent approvals through our Fast-track Approvals process
- give overseas investors certainty, whenever there is an investment that invokes the Overseas Investment Act, a decision being made in weeks.
Travelling with me I have officials from New Zealand and our chief exploration and production geologist, and for those of you I’m not already scheduled to see I’d encourage you to introduce yourselves or talk with my team.