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FinanceNew Zealand awards first offshore oil exploration license since lifting drilling ban
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New Zealand's government has awarded its first offshore oil and gas exploration license since lifting a drilling ban imposed by the previous administration. The license was granted to Australian firm EnZed Energy for a 12-year period in the Taranaki Basin, a region with 400 existing wells across 20 fields but considered underexploited. The current government, prioritizing energy security over the previous focus on transitioning to low-carbon sources, reversed the ban last year and invited bids. New Zealand's gas production has halved since 2017, dropping to 215 million cubic meters per month, increasing reliance on imports. The government also plans to build an LNG import terminal, potentially operational by 2025 or 2028, to address electricity sector vulnerabilities during dry years when hydro lakes run low.
Source report
New Zealand’s government has awarded its first offshore oil and gas exploration license since lifting a ban on drilling last year. The ban had been implemented by the previous administration, which prioritized transitioning from hydrocarbons to low-carbon electricity sources.
The current government, however, has shifted focus toward energy security. After removing the ban, it invited companies to bid for oil and gas resources. Australian oil and gas firm EnZed Energy has now become the first company to tap New Zealand’s offshore oil and gas resources following the policy reversal.
“This permit marks a major milestone for New Zealand's energy sector and shows that without doubt, we are open for business,” said resource minister Shane Jones, as quoted by Reuters.
Permit Details
- Duration: 12 years
- Location: Taranaki Basin
- Background: According to official New Zealand government data, the basin already hosts 400 wells drilled across 20 oil and gas fields, yet its potential remains underexploited.
Decline in Domestic Gas Production
While New Zealand was once self-sufficient in gas, production has dropped sharply over the past decade, with no new exploration permitted during that period.
- Average monthly gas production in 2017: 415 million cubic meters
- Average monthly gas production last year: 215 million cubic meters
As a result, the country has become increasingly reliant on imports and has recently experienced the drawbacks of that dependency.
LNG Import Terminal Plans
Even before the ban was lifted, the current government announced plans to build an LNG import terminal, with operations expected to begin as early as next year or by 2028.
“New Zealand is experiencing a renewable electricity boom, but a rapidly declining gas supply has left our electricity sector exposed during dry years, when our hydro lakes run low,” energy minister Simon Watts said earlier this year.
By Charles Kennedy for Oilprice.com
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New Zealand Awards First Offshore Oil License Since Ending Drilling Ban