New Zealand Oil & Gas says today's government announcements ending offshore oil and gas exploration permits will not have any immediate impact on its operations or the financial position of the company.
But it will mean the listed company has to start looking NZOG in other jurisdictions for new opportunities.
“New Zealand Oil & Gas intends to manage the risks associated with the government's policy change by investing in exploration and production assets in other jurisdictions," the company said in a stock exchange statement.
Its shares fell 3.23% to 60c after today's announcement.
NZOG chief executive Andrew Jeffries says the government’s move is a sudden policy change, which was not consulted on and conflicts with the government's pre-election promises.
However, Mr Jeffries says the "potentially transformational” New Zealand Oil & Gas exploration prospects in the Canterbury and the Great South Basins are unaffected by today's announcement and the company is continuing to market these prospects.
Mr Jeffries says the company is focusing on assets where its New Zealand capability can add value, with a preference for gas assets because gas is seen in most jurisdictions as a vital energy source for the transition to a lower carbon world.
He says renewable energy can provide almost all New Zealand’s electricity needs in a year of normal rainfall. However, another two thirds national energy use is industrial and transport related, for which complete renewable alternatives are not currently economically viable.
“The choice for New Zealand is whether we use our own resources for our own benefit, or New Zealanders rely on overseas energy sources benefitting those economies."
Environmental effect of ban on new exploration
NZOG says the ban on new exploration may mean carbon emissions in New Zealand and globally will be higher for longer.
“Petroleum resources in New Zealand are likely to be gas and gas condensate. Gas is a lower carbon alternative to coal for uses such as industrial heating, where no economically viable renewable alternative exists.
Mr Jeffries says if new gas supplies are unavailable then coal will continue to be used domestically for purposes such as dairy plants.
“Globally, ethically-produced natural gas from New Zealand produces far fewer emissions than alternatives such as Canadian tar sands or Venezuelan bitumen.
“Therefore, if natural gas from New Zealand is not permitted then the world will use more high-carbon fuel sources.”
New Zealand Oil & Gas this week acquired a 25% interest in an onshore exploration opportunity in Taranaki, which will be drilled in the fourth quarter this year (subject to regulatory consents).
The company has already locked in international marketing for its offshore South Island prospects.
The Barque prospect in the Canterbury basin has a work programme agreed with the government and a drill-or-drop decision due in April 2019.
A decision on the Toroa prospect in the Great South basin is due before April 2020.
NZOG says it will continue work on these prospects as they are not impacted by today’s announcement.
RELATED VIDEO: Grant Walker talks about the government's move with PEPANZ's Cameron Madgwick (Apr 12)
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