Bill to reverse mining ban proceeding under urgency

If enacted, the Bill has the potential to create new opportunities for direct domestic investment in oil and gas. Whether it goes far enough to jumpstart more interest from offshore investors remains to be seen.

Submissions are due by 1 October 2024.

Key provisions

The Bill makes a number of changes to the Crown Minerals Act 1991 (CMA) beyond simply reversing the 2018 ban, all of which are aimed at encouraging investment.

• A more activist approach: The purpose of the CMA will be changed from the ‘management’ to the ‘promotion’ of exploration and mining activities, and the functions of the Minister will shift from having to ‘offer’ to having to ‘attract’ permit applications. 
• New Government Policy Statement tool: The Minister will have the ability to introduce a Government Policy Statement (GPS) relating to the mining of petroleum and Crown-owned minerals.  This would provide the regulator with guidance on how to exercise its functions and inform the energy sector and general public of the Government’s priorities. 
• A more flexible decommissioning regime: Decommissioning involves removing infrastructure, plugging wells and undertaking site restoration and can carry significant costs. The Bill proposes to:
  • provide a definition for financial security arrangements which provides greater clarity and flexibility regarding acceptable securities;
  • limit the perpetual trailing liability for the cost of decommissioning to the most recent permit holder or former participant who transferred out; and
  • replace the requirement to provide payment or financial security to cover post-decommissioning costs with a perpetual liability for any wells and infrastructure left in situ.

These revisions, which will align New Zealand more with Australia and the UK, are designed to ensure that permit holders post-decommissioning remain liable for any actual risks that arise rather than having to contribute payments in anticipation of any future risk.  

• New non-tender options for petroleum exploration permits: In addition to the “Block Offer” public tender, the Bill proposes to offer non-tender methods to allocate new petroleum exploration permits. 

• Extension of data confidentiality period: The Bill will extend by six years the 15-year confidentiality period during which speculative prospectors can on-sell to interested explorers. The extension will apply to existing datasets to offset the effect of the 2018 to 2024 ban.

What’s missing

Although the Bill is a step in the right direction, there remains a disappointing lack of detail regarding the forms of security for decommissioning costs that the Minister will accept, the preferred priority for those, or the proportion that the Minister will expect to be secured. 

Previous guidance under the last Government had set the security minimum at 60% of agreed costs. This Government has indicated that a lower level would be required in order to facilitate investment but has yet to deliver any formal progress in this area.