In a bid to bolster energy security, New Zealand intends to pass legislation by the end of 2024 to reverse a ban on offshore oil and gas exploration that has been in place since 2018, the government said on Monday.
The cabinet has committed to act with urgency to reverse the ban and remove regulatory barriers to the construction of critically needed facilities to import Liquefied Natural Gas (LNG) as a stopgap.
New Zealand also plans to ease restrictions on electricity lines companies owning generation and improve electricity market regulation, the government said in measures outlined in an urgent action plan to boost energy security.
Earlier this year, the coalition government said it would introduce a bill in Parliament in the second half of 2024 to remove the ban on petroleum exploration beyond onshore Taranaki as part of a series of proposed amendments to the Crown Minerals Act.
New Zealand's natural gas production dropped by 12.5% in 2023 and by a further 27.8% for the first three months of this year, creating a nationwide shortage, according to government estimates. This has resulted in reductions in manufacturing output, while electricity generators have resorted to using more coal and diesel to power the electricity system.
"New Zealand currently has an energy shortage. 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," Energy Minister Simeon Brown said in a statement.
The inadequate energy resources have pushed up wholesale electricity prices, which are "devastating for our manufacturing and export sectors, and is sadly leading to firms reducing production or closing entirely," Brown added.
Resources Minister Shane Jones noted, "Oil and gas explorers need to have the confidence to invest here and know they will have a key place in New Zealand's energy sector now and into the future."
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More