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Oil and gas bond idea won’t work – officials kill Shane Jones’ idea for long-term industry certainty

Resources Minister Shane Jones wanted to introduce oil and gas bonds so that the sector would be compensated if a future government changed its approach, but he has been told this is not workable.

Jones revealed the advice from officials during an appearance before the Economic Development, Science and Innovation Committee in Parliament this morning.

The government is working its way through the reversal of the previous government’s oil and gas ban, with Jones calling for a return of industry players and providing long-term certainty should a future government revoke the ban.

He had floated the idea of ​​a bond program to entice investors to return to New Zealand and be compensated if a future government pulled the rug out from under them.

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“That idea has fallen into barren territory and is unlikely to find its way into Cabinet,” Jones told the committee in response to questions from Labor MP Megan Woods.

“The bond idea came as a way to reassure investors – you could say they were overblown or catastrophic – who were unsure that New Zealand has the level of regulatory consistency.

“Unfortunately, officials believe the idea will not work.”

Resources Minister Shane Jones wants to revive the oil and gas sector.
Resources Minister Shane Jones wants to revive the oil and gas sector.

He said he was the kind of politician who put ideas out there rather than spending months doing “clandestine” work, which could be considered “cavalier and reckless” – but that idea about myself didn’t start yesterday.

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Another of those ideas – which officials were still working on – was sharing revenues from mineral extraction with the regions. Whether that also applies to iwi “will have to be considered”, he told the committee.

He also reaffirmed his intention to change the liability landscape so that oil and gas investors are more likely to return and start drilling.

Woods criticized him and officials over the $335 million in taxpayer money spent on cleaning up and dismantling the Tui oil field. “Why are you exposing taxpayers to more Tui-like situations, reducing taxpayer protections in the legislation and diluting trailing liability?”

Jones: “I think you’re catastrophizing things. Obligations and financial security are still needed. What we have changed is the Crown’s ability to go back to ‘Adam and Eve’ in seeking liabilities – and the model will be up for debate in a select committee – and (instead) to the party who most recently owned the property. .

“It is superficial politics to suggest that liability will inevitably lie with the Crown.”

Green MP Steve Abel then pointed to the Deepwater Horizon disaster and asked Jones whether he would reduce the burden of responsibility on oil drillers for the damage they could cause to the economy, environment and fisheries to “attract some money”.

Jones: “We have taken a different approach to achieve a better balance between regulatory burden and budget risk management. The last government resulted in a cooling of investment and led to the untimely demise of the industry. I want to reinvigorate the sector with a range of different weightings in the way we deal with risk – that’s how politics works, folks.”

Labor MP Megan Woods.  Photo / Mark Mitchell
Labor MP Megan Woods. Photo / Mark Mitchell

‘Who’s going to pay for that?’

Earlier, as Minister of Regional Economic Development, he told the committee about the $1.2 billion regional infrastructure fund. A small amount ($22 million) would be used to run it, while another small portion (yet to be confirmed) would be available for grants, but the bulk of it would be for capital investment, with the final criteria being that the Cabinet should sign an agreement. July 1st.

The capital projects could be divided into two categories: flood resilience and enabling productivity, but Jones warned it would be a partnership rather than the Crown taking the lead.

Take the onshore infrastructure needs for offshore wind in Taranaki, which could replace oil and gas as the “next Garden of Eden economically speaking, although I have my doubts about that”, or for gas exploration off Oamaru.

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“Who is going to pay for that? My answer is: don’t expect a subsidy from me.”

What would ultimately be funded would be up to the regions because “I don’t like these things, Wellington knows best”.

This led to some verbal exchange with Glen Bennett, the Taranaki-based Labor MP, who said there were already priorities endorsed by the region in the Taranaki 2050 roadmap, with a focus on oil and gas transition.

“But it seems like you’re not listening to the region,” Bennett said.

Jones said they had to “agree to disagree” and talked about how the “black and white gold” had enriched the region.

Derek Cheng is a senior journalist who started at the Herald in 2004. He has worked for several periods in the press gallery team and is a former deputy political editor.

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