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Country needs proper plan for transition from oil industry

CTU confident about transition but says oil workers rightly anxious about their futures. Watch Grant Walker's interview with Sam Huggard.

Brent Edwards
Wed, 18 Apr 2018

The Council of Trade Unions warns the country needs to plan properly to ensure new industries emerge and grow as the oil industry shrinks.

But CTU secretary Sam Huggard says that, by deciding now to end new offshore oil and gas exploration, the government has left enough time to plan the transition to other industries.

Mr Huggard says it is a big decision and the CTU recognises crude oil is an important export for New Zealand.

Export figures from Statistics New Zealand, however, show crude oil exports falling in both value and as a proportion of total exports. In 2008 the country exported $2.769 billion of crude oil, which represented 6.45% of total exports of $42.9bn. In 2017 crude oil exports had fallen to $625.35 million, or just 1.17% of total exports of $53.6bn for the year.

Mr Huggard says workers will be rightly worried about their jobs, although no one will lose their job immediately as a number of the existing oil and gas permits extend until 2046.

“Workers will be really concerned to make sure that this is done right. Let’s be clear a lot of those jobs are really well-paid jobs. They’re supporting a lot of families and communities. They will be rightly anxious to make sure they’ve got a future.”

Mr Huggard says he has been reassured by government statements that this will not be left to chance.

He says work needs to be done on identifying industries that can pick up the slack as the investment in oil and gas falls. It is worth noting though that for the first time global investment in renewable energy outstripped investment in drilling for oil and gas last year.

Alternative investments
“There has been enormous investment, particularly in solar in Australia and China, and all our competitors are getting in this space and we need to be doing that sooner rather than later. What we want to make sure is there’s a plan to support workers through that process so we don’t have the big ups and downs, the big layoffs as we saw particularly in the 1980s with all the manufacturing and SOE closures and changes to those SOEs.”

Mr Huggard says the CTU wants to be part of the planning and make sure workers are contributing to that. What was needed was a signal the country could not continue to rely on fossil fuels forever and that there needs to be investment in other energy sources.

“I take some heart from the work Venture Taranaki and others have done before this year, you know last year, the year before, identifying the role of their new sectors they’re keen on putting resource into in terms of clean energy, in terms of lifting food manufacturing up the higher value chain of the visitor profile. And I think Shane Jones has been right to add in Maori economy to that dimension as well, of boosting support there.”

Mr Huggard says there has been a little bit of fearmongering from the oil industry with its talk of thousands of workers losing their jobs.

Petroleum Exploration and Production Association of New Zealand (PEPANZ) chief executive Cameron Madgwick told NBR last week the government’s decision reflected its “fundamental misunderstanding of the industry.”

Mr Madgwick says that with less work there will almost certainly be job losses.

“The government has clearly said there is nothing for these people to do. That’s got to have an impact on jobs.”

But Mr Huggard says that is not going to happen overnight and if the government, industry and unions work together alternative industries can be developed.

“There is a long time to get this right and to plan it. And I guess what we would have liked to have seen from the oil industry representatives last week was a more responsible attitude that, yes, we realise change is happening and that investment in renewables is far outstripping our sector and we can use our expertise and intellectual capacity, our scientific base to be part of a transition.”

He says he knows the industry is already thinking about this seriously and about what role hydrogen can play as a transition fuel.

“We can do this with the time we’ve got available but we can’t do it if we just leave it for another five or 10 years and continue mining, continue exploring for oil and gas and then have a major shock in 10 years.”

Mr Huggard says the biggest challenge for the government will be over working out what to do with natural gas and the role it might play in the transition to renewable energy.

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Brent Edwards
Wed, 18 Apr 2018
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Country needs proper plan for transition from oil industry