Oil exploration: Govt faces reality of coalition marriage

Shane Jones’ face during the three party media conference at Parliament on the future of mining for oil and gas in New Zealand said it all.

The coalition government has put a halt to future offshore oil and gas exploration permits.

Onshore exploration in Taranaki will be allowed for another three years.

The deal struck does not truly satisfy either of Labour’s governing partners, the Greens or New Zealand First, but Mr Jones, the Regional Development Minister looked like he would rather be anywhere else but on that podium.

The policy change sounds dramatic but in reality there will be mining activity in New Zealand potentially through until 2050 (also the date for the government’s target for net zero carbon emissions).

There are still 31 active exploration permits – 22 of those are offshore covering an area roughly the size of the North Island. The last of those permits will wind up in 2030, but they also contain inherent rights for companies to mine if they make a ‘commercial discovery’ and meet the legal tests.

According to the National Party, the government’s taking a “wrecking ball to the regions”.

The long-term economic impact, for the party positioning itself as the champion of the regions – New Zealand First – was always going to be a hard sell.

Taranaki is the mining hub of New Zealand and although the New Plymouth mayor Neil Holdom describes the decision as a “kick in the guts”, the government has packed support and transition time around the region.

Mr Jones went to Taranaki last week to unveil a $20 million dollop of cash from the Provincial Growth Fund to help broaden the region’s economic focus beyond oil and gas. Taranaki also has the only exception to the halt on future permits.

“This is not a Welsh mining moment, no-one is going to wake up tomorrow and discover they don’t have a job in this sector,” he said.

“Whether or not as I, as the face out in the regions, … will be hammered, it’s a debate worth having.”

Mr Holdom said it would take “a hell of a lot more” than the cash injection to transition from oil and gas – not the response Mr Jones would have wanted, but one he probably expected.

His party ensured existing jobs and existing commercial rights would not be “molested” by the government, Mr Jones said, as a result of the political negotiations.

But as a “pro-industry man” he is clearly finding it a hard policy to swallow.

It was “futile”, Mr Jones said resignedly, to consider any alternative scenarios because this is what his leader Winston Peters and Prime Minister Jacinda Ardern have agreed.

Not the most enthusiastic of endorsements.

Greens ‘delighted’ and ‘just getting warmed up’
Green Party co-leader James Shaw is “absolutely delighted” with what he describes as one of the biggest wins his party’s ever had.

“I also know it’s not going to be the last win we get as well – we’re just gettin’ warmed up.”

He acknowledged the agreement to provide future certainty to the industry, and the demands of New Zealand First and Mr Jones: “that’s why we sent him up to Taranaki last week … to make those investments”.

But Mr Shaw admits the complete wind-down of oil and gas mining won’t happen as quickly as he and Green Party supporters would have liked.

The deal contains another unpalatable element, but one which the Greens had little choice but to accept as part of the compromise.

Onshore permits means the controversial practice of fracking will be allowed in Taranaki for the next three years, a practice loathed by the Greens.

When Ms Ardern took to the parliamentary forecourt a few weeks ago to assure protesters the government was “actively considering” the future of oil and gas exploration, the pressure came on Mr Peters about his party’s position.

He would not be drawn on “hypotheticals”; Mr Peters said there would be “intensive” discussions but New Zealand First would “not compromise” on what had been agreed.

When the deal came together, the commitment to existing jobs and commercial interests suited the narrative of all three parties as the promise a “just transition” to a low carbon economy and helps justify their varying positions.

In other words the mining industry will be alive and well in New Zealand for some decades to come.

As well as political compromises the government had a raft of other considerations, not the least of which would have been the possibility of legal action by way of judicial review.

But this deal does send the headline message to Green and Labour supporters, looking to the new government for action on the issue Ms Ardern claimed as “her generation’s nuclear-free moment”.