Offshore oil and gas ban 'worst political decision', Shane Jones says

The single largest opportunities for economic development in Taranaki are reviving the oil and gas sector and accelerating the development of seabed mining, according to Regional Development Minister Shane Jones.

Jones has been in New Plymouth for the Taranaki Regional Growth Summit, one of a series of such roadshows making their way around the country.

The self-confessed "motor-mouth" told the hand-picked audience that the offshore oil and gas ban "was the worst political decision" he had ever been involved with, "so, if I seem to you half-mad on this question of energy, it's a journey of penance."

Jones admitted some oil and gas investors had told him they would not be coming back to New Zealand but he was optimistic for the sector.

"From my perspective the oil and gas sector has a rosy future, but we need to be sure our sovereign reputation internationally is safeguarded and I am discussing with officials what incentives could be brought forward to develop fresh oil and gas opportunities.

"I'm confident also that there is now a broader acceptance - certainly in the senior levels of the parliamentary community - that we can't have power resilience unless we have gas."

Jones said one incentive to oil and gas companies might be to include an adverse event clause in exploration deals.

"An adverse event clause means that if politics threatens property rights then people can claim compensation."

Labour had already created a precedent when it included such a clause when it paid a $140 million subsidy to New Zealand Steel to install a new electric arc furnace for recycling scrap steel, Jones said.

Another incentive being explored was reducing the royalties owed to the government to make New Zealand a more attractive destination to drilling companies.

On seabed mining, Jones said it was clear that Trans-Tasman Resources had existing rights in the South Taranaki Bight and these could not be usurped by offshore wind energy companies which claimed the two industries were not compatible.

"The seabed mining applicants are entitled to go through the Fast Track legislation. I think one of the greatest barrier they face is not offshore wind but cultural wind," he said in a veiled dig at Ngāti Ruanui, which has fought seabed mining application from the onset.

"I'm confident science, economics and technology will deliver the correct result and that can happen through the Fast Track legislation."

Jones said offshore wind operator Bluefloat Energy's withdrawal from the market was less about a clash with seabed mining and "their own economic decision".

"Seabed mining won't detract from offshore wind. We want multiple sources of energy offshore wind included."

New Plymouth Mayor Neil Holdom said the Taranaki Mayoral Forum had raised with the government that the two sectors were potentially not compatible and asked that to be explored.

"We highlighted that we are very committed to seeing an offshore wind industry developed in Taranaki. We think that is really important to the future of NZ Inc and asked the government to make sure they really understand the risk."

Holdom was supportive of the use of adverse event clauses to attract offshore exploration back to the province.

"I think it's a really good start but what we want to see is it not just applied to future oil and gas permits but to all the existing permits to encourage drilling so we can get some more gas and we can stop all these factories closing and all these people being put out of work."

Clarus CEO Paul Goodeve the offshore exploration ban's imminent reversal was a good step but he was not convinced the risk to oil and gas investors had been resolved.

"New Zealand is a very egalitarian electorate. We give each side of the house six years or maybe nine years if they are really good, but it takes a decade before a drilling campaign really gets going. So, investors will be looking beyond this government and thinking about what the next government will look like."

Goodeve said an adverse event clause in a contract would be just one factor an investor might consider.

"We might have this adverse event clause and that'd probably be a plus but we're a long way from anywhere, we're a small economy they're all negatives, so it will be part of the weighing up investors do."

Goodeve said energy assets and investment decisions were necessarily long term and what New Zealand needed was a consistency of government policy that stretches beyond the current government so investors felt confident to invest here.

Outside the event a small group of activists from Climate Justice Taranaki and Kiwis Against Seabed Mining were promoting local products and the concept of a circular economy as opposed to a growth-orientated economy.