New Zealand Reverses Offshore Oil Exploration Ban
New Zealand's government plans a significant policy shift by reversing the 2018 ban on offshore petroleum exploration to boost investment and economic growth.
Editorial Team (ET)July 9, 2025
New Zealand is on the cusp of a significant policy shift that could reshape its energy landscape. On Sunday, the government announced its intention to introduce legislation that will reverse the controversial 2018 ban on offshore petroleum exploration. This move aims to reinvigorate the oil and gas sector, attract investment, and foster economic growth. But why is this change happening now, and what does it mean for New Zealand's future?
The Exploration Ban and Its Impact
In 2018, the centre-left Labour-led government implemented a ban on offshore petroleum exploration, a decision driven by environmental concerns and a commitment to reducing carbon emissions. At the time, this was seen as a bold step towards a greener future, aligning with global efforts to combat climate change. However, the ban also had significant economic repercussions. Investment in the oil and gas sector declined, companies faced uncertainty, and job losses ensued. The ban also impacted New Zealand's energy security and economic stability, leading to debates about its long-term feasibility.
Details of the Proposed Legislation
The current right-of-centre government, led by Prime Minister, has proposed a bill to overturn this ban. According to Resources Minister Shane Jones, the new legislation will not only remove the ban but also introduce changes to the petroleum exploration application process. These changes aim to streamline the process, making it less costly and more efficient for the industry.
Key Provisions
The proposed bill includes several key provisions:
- Removal of the Offshore Exploration Ban: Allowing exploration activities beyond the onshore Taranaki region.
- Improved Tendering and Allocation Process: Making it easier for companies to bid and secure exploration rights.
- Alignment with International Best Practices: Ensuring New Zealand’s regulations are competitive on a global scale.
- Regulatory Efficiency: Reducing bureaucratic hurdles that currently deter investment.
Jones emphasized that the current settings are a barrier to investment due to their high cost and complexity. The bill is expected to be introduced to parliament before the end of 2024, marking a significant policy shift.
Economic and Industry Implications
Reversing the ban on offshore exploration is expected to have substantial economic benefits. By attracting new investment, the government hopes to stimulate growth in the oil and gas sector, leading to job creation and increased revenue. The proposed changes are designed to make New Zealand a more attractive destination for energy investments. By reducing regulatory costs and aligning with global standards, the government aims to draw interest from major international oil and gas companies.
Potential Economic Benefits
The economic impact of reversing the ban could be significant. Increased exploration activities would likely lead to higher production levels, boosting exports and generating additional revenue for the country. In 2022, New Zealand exported around NZ$900 million worth of oil, with petroleum revenues contributing NZ$214 million to the crown in 2022/23. These figures could see substantial growth if the bill is passed.
Environmental Concerns and Opposition
Not everyone is in favor of the proposed legislation. Environmental groups and the Green Party have voiced strong opposition. They argue that reversing the ban would undermine New Zealand’s climate commitments and pose significant environmental risks. The Green Party, a vocal opponent of the bill, launched a petition last year to keep the exploration ban in place, highlighting the environmental risks associated with offshore drilling. Greenpeace, an environmental campaign group, has also expressed concerns, arguing that New Zealand should focus on renewable energy sources instead of expanding its fossil fuel industry.
Environmental Impacts
Reversing the ban could have several environmental impacts. Offshore drilling poses risks such as oil spills and habitat disruption. Additionally, increased fossil fuel production could lead to higher carbon emissions, conflicting with New Zealand’s climate goals. The government acknowledges these concerns but believes that the economic benefits outweigh the risks. They argue that the current regulatory framework is overly restrictive and deters investment. By reforming these regulations, they aim to create a more favorable environment for the oil and gas industry while still addressing environmental issues.
Government’s Justification
The primary justification for the bill is to remove barriers to investment. The government argues that the current settings are too costly and cumbersome, discouraging companies from investing in exploration and production. The government claims that it is committed to balancing economic growth with environmental protection. They emphasize the importance of adopting international best practices in petroleum exploration to minimize environmental risks.
Conclusion
New Zealand’s decision to introduce a bill to reverse the oil and gas exploration ban marks a significant shift in its energy policy. The proposed legislation aims to attract investment, stimulate economic growth, and enhance regulatory efficiency. However, it also faces strong opposition from environmental groups and political parties concerned about its impact on climate goals and marine ecosystems. As the bill progresses through parliament, the debate over New Zealand’s energy future is set to intensify, highlighting the complex interplay between economic development and environmental stewardship.
