Prime Minister Jacinda Ardern announces the Government's decision to cease offering new offshore oil exploration permits, with Energy Minister Megan Woods and a visibly uncomfortable Regional Development Minister Shane Jones.

A decision to stop offering new oil exploration permits will cost the Crown billions in revenue with little impact on New Zealand's greenhouse emissions, official advice claims.

On Monday Energy Minister Megan Woods tabled the Crown Minerals (Petroleum) Amendment Bill in Parliament, designed to give effect to the Government's decision in April to end offering new offshore oil permits, with a short reprieve for onshore permits in Taranaki.

The law change amounts to an attempt to avoid the risk of being sued by international oil services companies, although the Government has claimed the risk of legal action is low.

MBIE Official advice from the Ministry of Business, Innovation and Employment warns that banning the offering of new offshore oil permits could potentially increase global greenhouse emissions, while also having a chilling effect on investment elsewhere in the sector.

Official advice on the impact of the decision from the Ministry of Business, Innovation and Employment (MBIE) warns the decision will be financially costly. Officials estimated the fiscal impact from lost revenues between 2027 and 2050 would be a hit of $7.9 billion on a net present value basis.

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In this case net present value estimates the impact of the decision as if it were an amount of money held today.

Energy Minister Megan Woods has mocked the measurements used by MBIE, which are based on a series of assumptions around interest rates and oil prices. The report contains a number of measures which suggest the impact could be as little as a few hundred million dollars, ranging up to around $50b.

"What this advice shows me is that we don't know what the cost is," Woods said in a statement.

ROSA WOODS/STUFF Energy Minister Megan Woods has introduced legislation to Parliament to give effect to the Government's decision to offer no new space for offshore oil exploration.

"The data on which the model is based is by GNS' own admission "trying to quantify that which is almost unquantifiable." When you have a range that puts foregone revenue between $228 million and $53.3 billion you're pretty much admitting you don't know," Woods said.



"We might as well break out the crystal ball."

MBIE's report also questions whether the move will have environmental benefits.

"The transfer of production to other countries that have higher emissions footprints may result in an increase in global greenhouse gas emissions, although the timing and scale of this impact are uncertain."

It also warned that the decision could impact how secure New Zealand's electricity supply is, because gas is used to generate some electricity.

supplied The oil industry said that after weak oil prices sent the sector into decline in recent years, interest in exploring in New Zealand increased sharply in 2017.

Woods said the analysis used by MBIE "does not take into account the fast pace at which the rest of the world is changing" with large emitting countries such as China and India making rapid progress to cut carbon.

"By the model's own admission, oil or gas from a block offer this year will not come on stream until the late 2020s. By then the world will have very different approach to emissions."

Much of the advice provided repeats earlier messages delivered by officials in the petroleum and minerals team at MBIE.

When documents related to the decision were released, it emerged that announcement made by Prime Minister Jacinda Ardern was made without any Cabinet paper, with leaders of the coalition parties striking a political deal.

Industry lobby group Pepanz said the advice showed it was time for a "re-think" of the plan, based on the financial hit to the Crown.

"This is only a part of the picture. Company profits could also reduce by billions which will cost jobs and investment into New Zealand, and the wider economic costs have not even been modelled," Pepanz chief executive Cameron Madgwick said.

"As well as the lost revenue it will mean higher energy prices for New Zealand homes and businesses, increasing the cost of living and destroying jobs."

National's energy spokesman Jonathan Young said the latest move to change the law was "groundhog day", which like the April decision came with no consultation.

"This is once again an ideological decision. It's trying to find a legal grounds to back up what the Prime Minister has said."

Young said Woods' comments that the costs could not be measured was "a cop out" because it was clear that they would be large, with the industry contributing more than $2 billion a year to New Zealand's economic output, while the industry gave security to New Zealand's electricity supply.

"The potential costs are not just Government revenues or to the oil and gas industry or the Taranaki economy, the potential costs will be felt everywhere in the economy and residences."

Greenpeace executive director Russel Norman said MBIE was "essentially operating as the 'enemy within' by working with the oil industry to stop progress on climate change".

MBIE's advice "could have been written by the oil industry," Norman said.

"MBIE hasn't considered the economic and human consequences of climate catastrophe in their benefits and costs analysis - just like the oil industry they serve."

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