Wider Govt controls on oil exploration

Press, 1 September 1980, Page 10

Wider Govt controls on oil exploration

PA - ; • Wellington A bill giving-the Minister of Energy over-riding power to control the development of any oil discoveries in the national interest has been introduced to Parliament. The bill also contains provisions for the assessment of royalties on: oil discoveries. . . Under the. . ’Petroleum Amendment (No. 2) Bill, the Minister's power covers three cases. The first case is where the holder of a prospecting licence makes a discovery and applies for a mining licence to develop it. The Mininter will grant a mining licence, but only for an initial period of up to four years. During this period, the li-cence-holder will have to submit a work programme and if it does not meet the Minister’s approval, he will be able to revoke it

The Minister can decline a work programme oh two grounds -— that it is_ contrary to the national interest, or that it is contrary to recognised good oil field practices. Where the Minister’s decision is based on the national interest there is no right of appeal, but revocation on the second. ground can .be taken to arbitration by the licence-holder and the Minister will be bound’ by the decision. .

Where the Minister’s decision is upheld, the licenceholder will be given three months to provide an acceptable work programme or the licence is revoked. The Government will'have to reimburse the company involved, with the actual costs of the seismic work and exploration wells, and reasonable costs involved in the work programme.

A method of calculating interest to. be paid by the Government in any compensation settlement is provided in the bill. The second case is where the Minister -decides in the national interest to postpone the development of an oil discovery. Compensation will be available' if the comK surrenders a licence ise of a postponement. The third case is., where the Ministej considers that in the national interest the development Of a ; discovery should proceed, but the discoverer is not prepared to develop it. ’ Six months notice, is to be given to the licensee to apply for a mining; licence and then submit a work .’programme acceptable to • the Minister or, have his licence revoked. X ■ ’ . . Introducing the bill the

Minister- of Energy (Mr Birch) -’ said the measures were similar to those in other countries, particularly Britain.

“The right of a nation to retain some such power is generally recognised by petroleum explorers and the major, oil companies active in New Zealand exploration have not indicated any serious opposition to the proposals which have been discussed . in detail with them,” he said. Mr Birch said he expected acceptance of the principles contained in the bill by those contemplating extending their exploration activities in New Zealand, although there would no doubt be further discussions with some of the companies. In formulating the bill, fie had been conscious of the need, on the one hand, to encourage petroleum explor-

ation in New Zealand, and on the other to ensure there was adequate protection of the nation’s interest in its resources.

This applied both to the development of the resource and to ensuring a sufficient return on any such use. The Government has previously had control over development of oil fields through Petrocorp’s 51 per cent holding in prospecting licences. ’.“This method was not popular with the oil companies and in discussion with them they expressed a preference for this power to be transferred to the Minister.” Mr-Birch said. The main principles had been argued out with the oil companies earlier this year, and the legislation was just a further step in the goal of attracting large-scale investment in oU exploration in New Zealand. Already a favourable cli-

mate existed and it was expected that $6O million would be spent on exploration tiiis year. The change was criticised by Labours energy spokesman, Mr F. Colman, who described ii as a vote of. noconfidence in Petrocorp, a wholly-owned Government corporation. i, Mr Colman said the heavy-handed actions of the Prime Minster (Mr Muldoon) and his “outright greed” in recent years had forced petroleum explorers from New Zealand shores.He asked if the measure was just a “patch-up job” to placate the oil companies and attract them back to New Zealand. > Mr Colman said it was common knowledge that the Government was having- a row with Hunt Petroleum, Ltd, and that urgent legislation was needed to get the company going in the Great South Basim