A 2014 protest against an Anadarko ship planning to explore for oil near Kaikoura.

A large chunk of Canterbury's coast will again be offered up for oil and gas exploration, under a Government proposal described as "lunacy" by Christchurch's deputy mayor.

The Government wants to set aside nearly 300,000 square kilometres of New Zealand's east coast for oil and gas companies as part of its 2017 block offer.

The annual block offer allows companies to compete for exploration permits.

SUPPLIED Part of the northern area proposed for oil exploration.

This year's proposed offer would open up the largest area near Canterbury yet.

It includes a space near the Banks Peninsula Marine Mammal Reserve, home to the endangered Hector's dolphin.

READ MORE:

* Deep sea oil drilling off Canterbury coast 'sheer lunacy', Vicki Buck says

* Christchurch City Council opposes deep-sea oil drilling

* Christchurch City Council fired up over oil drilling plan

SUPPLIED Part of the southern area proposed for exploration.

Last year's offer was deeply unpopular with the Christchurch City Council and environmental groups.

They argued that deep-sea drilling could threaten the region with a catastrophic oil spill for little economic gain.

Despite lagging oil prices, the Government said the block offer process had been successful in the past.

"I acknowledge the challenging low oil-price environment that industry is currently facing but we know commodity prices are cyclical," Energy Minister Simon Bridges said.

"The Government remains committed to providing a stable and predictable regime."

He said the Government would seek feedback from iwi and local authorities before finalising the areas to offer.

Christchurch Deputy Mayor Vicki Buck said encouraging deep-sea drilling near Canterbury made no environmental or economic sense.

"We have no capacity as a country to deal with an oil spill," she said.

"It's hugely high risk, and doesn't actually make economic sense."

The world was moving away from oil, and Canterbury's economy depended on its already tenuous clean green image, she said.

"The last thing you want is any form of oil spill off your coast, because the tarnishing of your image is there forever.

"At no level can it make sense . . . It's lunacy, and I cannot believe they haven't just quietly gone away with this ridiculous idea."

The proposal would allow exploration of an area known as the Canterbury-Great South basin.

It stretches from Banks Peninsula down the South Canterbury coast. Another large area near Kaikoura, known as the Pegasus Basin, was also part of the proposed offer.

Permits in the past have been given to international companies including Shell, Anadarko, and Woodside Petroleum.

Bids for the 2016 block offer closed earlier this month, with permits expected to be awarded in December.

It was possible no company would earn an exploration permit.

Oil Free Otautahi spokeswoman Bridget White said it was "absolutely astonishing" that oil exploration would be allowed in the area.

"We know the impacts of deep sea oil spills, and we know that off the coast of Canterbury there are endangered Hector's dolphins and large numbers of seabirds that would be incredibly affected," she said.

Green Party energy spokesman Gareth Hughes said opening up such large areas "smacked of desperation" and was not the way to run a 21st century economy.

"Around the world people are turning away from fossil fuels but National doesn't seem to have got the message," he said.

The consultation process begins on October 17. The confirmed areas will be decided early next year.