Offshore oil and gas ban may result in legal action

Well, surprise, surprise…

Stuff reports that the oil and gas ban, that Cindy imposed so that she could look good on her trip to Europe earlier this year, is going to cost our economy billions.

We already knew that. quote:

A decision to stop offering new oil exploration permits will cost the Crown billions in revenue with little impact on New Zealand’s greenhouse emissions, official advice claims.

On Monday Energy Minister Megan Woods tabled the Crown Minerals (Petroleum) Amendment Bill in Parliament, designed to give effect to the Government’s decision in April to end offering new offshore oil permits, with a short reprieve for onshore permits in Taranaki.

The law change amounts to an attempt to avoid the risk of being sued by international oil services companies, although the Government has claimed the risk of legal action is low. end quote.

So the government always knew they were at risk of being sued, but went ahead anyway? Isn’t it nice to know that they look after our hard earned dollars so well? quote:

Now they are applying legislation to avoid the risk of legal action resulting from their destruction of the oil and gas industries. So we are not just looking at a loss of $7.9 billion of Crown revenue. If any ensuing legal action is successful, it could cost a hell of a lot more than that.

Scoop  pointed out in August that legal action my be coming, as a result of the ban. quote:

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. end quote.

What economic efficiency grounds? The loss of $7.9 billion of Crown revenues? How is that ‘economic efficiency’? quote.

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”. end quote.

Wasting an enormous amount of Crown revenue is reckless, not courageous. Directors of public companies would go to jail for such actions. This government cannot virtue signal its way out of court cases. It may seem very noble (to some), but these contracts are entered into years in advance. Yes, they may be going ahead with Block Offer 2018, but that is all. quote.

 [Jonathan] 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”. end quote.

However, now that Jacinda has left for New York, Megan Woods has offered something of an olive branch to the industry. Stuff reports: quote.

Just hours before announcing a law change to give effect to the new offshore oil exploration ban on Monday, Woods met with oil industry figures to discuss their request for more leniency on the conditions of existing exploration permits.

Woods said she agreed that on a case-by-case basis, she will consider giving the oil companies more time to fulfil their commitments on the permits, describing it as “a little bit of a pause”. end quote.

Don’t be fooled. It is obvious that the threat of legal action is very real. Why else would she suddenly consult with the industry, almost 6 months on from announcing a decision that destroyed their business without a shred of consultation? It is time someone held them to account for their economic sabotage.

So not only have we lost a possible $7.9 billion of Crown revenue, but we may be up for expensive litigation with oil and gas explorers and producers as well. Fasten up, New Zealand. Virtue signalling just got really expensive.

 


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Accountant. Boring. Loves tax. Needs to get out more. Loves the environment, but hates the Greens. Has been called a dinosaur. Wears it with pride.

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