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Legislation coming on offshore oil and gas exploration ban

Originally published in Energy and Environment on August 15

Energy and Resources Minister Megan Woods says further legislation will be needed to end the issuing of new offshore oil and gas permits.

In Parliament National has continued to push the case that the Government acted unlawfully in announcing the ban, but Woods said this work was ongoing.

Officials brought into the loop late in the decision-making process warned Energy and Resources Minister Megan Woods that the ban should be handled carefully. They said the process should follow the Crown Minerals Act and in particular it should emphasise the economic efficiency grounds as the basis for the decision.

Questioned in Parliament, Woods said advice included advice on her obligations under the Crown Minerals Act and, therefore, the minerals programme for petroleum. “No statutory decision (was) associated with that announcement. I also note that as signalled at the time of the announcement, policy development work has been proceeding on how to give effect to that decision, and this will be released, along with further advice, in due course.”

Woods indicated the Government was currently managing Block Offer 2018. “What the Government also announced on 12 April… is that we intended to change the way in which we applied that in the future. We are currently undertaking the policy work. We have signalled there is likely legislative change for any further block offer announcements. That, of course, will also alter the petroleum programme, as the instrument that sits under that piece of legislation.”

Woods said a critical part of managing sovereign risk is giving clarity of policy. “What this Government had the courage to do was give a very long-term signal on the direction we were travelling. We are talking about policies that will take 30, 40, possibly 50 years to roll out. This is a Government that has the courage to look beyond the three-year political cycle in terms of sovereign risk. “

Asked if she accepted the manner of the decision was potentially illegal, Woods said “no statutory decision was made in regard to our announcement. We announced Block Offer 2018, and that process is proceeding”.

Woods pointed to Todd Energy investing $100 million in a new gas peaker, Methanex’s new gas contract through to 2029, OMV's purchase of Shell's remaining assets and Tamarind’s drilling programme as all signs of health in the sector.

Young said the ban was a hasty decision, ill-thought through and inconsistent with the law. “The Government was at risk of a legal challenge, and we know these avenues are now being actively explored by the businesses unfairly affected. That’s because around $150 million had been committed in good faith to seismic surveying of offshore areas in the months ahead of the exploration ban announcement, activity which was signed off by Ms Woods, only for this bad decision to be dumped on them out of nowhere.”

He said the Government knows its announcement was inconsistent with the Crown Minerals Act, “which is why it is undergoing the charade of creating a statutory framework for a decision it made months ago”.


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