New Zealand announced on Monday that it will pass new legislation by the end of this year to reverse a ban on offshore oil and gas exploration, while also taking urgent action to remove regulatory barriers to importing liquefied natural gas (LNG). These measures come in response to the country’s ongoing energy shortages, which have driven energy prices to some of the highest levels among developed nations.
The forthcoming law will end the ban, which has been in place since 2018, on exploration outside the onshore Taranaki region, an energy-rich area on the country’s North Island. This move aligns with the right-of-center government’s strategy to attract investment to New Zealand’s oil and gas sector, bolstering energy security and addressing the recent supply crisis.
Prime Minister Christopher Luxon emphasized the severity of the current energy shortages, noting that they have led to sharp increases in energy prices. “We are responding to a situation that New Zealand should never have faced,” Luxon stated during a media briefing. He urged opposition parties to support the proposed bill, calling it a “sensible, common-sense” solution for those who genuinely care about the country’s energy security.
The ban on offshore petroleum exploration was originally implemented by the previous center-left Labour-led government. However, recent data shows that New Zealand’s natural gas production has declined significantly, dropping by 12.5% in 2023 and a further 27.8% in the first quarter of 2024. These declines have triggered a nationwide energy shortage, forcing power generators to rely more heavily on coal and diesel to keep the grid operational, according to Energy Minister Simeon Brown.
The government has acknowledged that renewable energy sources such as hydro, solar, and wind have not been able to compensate for the shortfall in natural gas. “The lakes are low, the sun hasn’t been shining, the wind hasn’t been blowing, and we have an inadequate supply of natural gas to meet demand,” Brown said.
In addition to lifting the ban on offshore exploration, the government plans to streamline and reduce the costs associated with consenting, building, and maintaining renewable power generation, as well as electricity distribution and transmission. Brown announced that the approval process for most renewable energy projects will be expedited, with a target of completing the process within one year. Furthermore, the government aims to launch its first feasibility permit round for offshore renewable energy projects in 2025.
These initiatives are part of a broader effort by the New Zealand government to enhance the country’s energy resilience and ensure a more stable and secure energy supply. By reopening offshore oil and gas exploration and accelerating the development of renewable energy projects, the government hopes to address both the immediate energy shortages and the long-term energy needs of the nation.
