In an act of climate denial, the Luxon Government is today planning to pass legislation to try to restart offshore oil and gas exploration, but they are also slipping in a further amendment that opens the door to taxpayers picking up the billion dollar tab to decommission oil and gas infrastructure.
“Attempting to restart offshore oil and gas exploration is bad enough, given advice from the International Energy Agency that we can’t burn existing known fossil fuel reserves if we are to avoid dangerous global heating. When you’re in a hole the first step to escape is to stop digging,” says Greenpeace Aotearoa Executive Director Dr. Russel Norman.
“The environment movement will fight any new offshore oil and gas exploration just like we did when John Key was Prime Minister.
“But this legislation is even worse: Luxon is proposing to overturn existing law that makes oil companies automatically responsible for the costs of decommissioning oil and gas fields.”
Under existing law, even if an existing operator onsells an end-of-life oil and gas field to a shell company, which then goes bankrupt when faced with the costs of decommissioning, the original operator is still responsible for the cost.
“Luxon is changing the legislation so that the Minister of Resources and the Minister of Finance are given total ministerial discretion to approve the onselling of the depleted field, and if they approve and the final operator goes bankrupt, the original oil field operator is NOT responsible for the decommissioning costs. The government will end up with the cost.
“New Zealand taxpayers will be the ones that will be picking up the cost of cleaning up after oil companies abandon exhausted oil fields. Costs that could run into billions of dollars,” says Dr. Norman.
“New Zealand has already learnt an expensive lesson in how the oil industry operates. The Tui oil field passed through a number of hands before it was finally sold to an offshore oil company Tamarind that had little money, and Tamarind went bankrupt when faced with the cost of decommissioning the exhausted field. New Zealand taxpayers were stung for $300million to clean up the mess and plug the wells, which was only completed in June 2025.
“After the Tui field fiasco, the law was changed to make sure oil field operators were responsible for the clean up costs, regardless of how many shell companies to which it was onsold.
“The oil industry hated the changes to the law on liability for decommissioning costs as much as they hated the ending of offshore oil and gas exploration. And now they have their chance to pass on the costs to the taxpayers and you can be sure they will take it.
“As the New Zealand oil and gas industry enters its sunset phase, the costs of plugging the wells and cleaning up all the seafloor pipes etc will run into the billions.
“This fossil fuel-obsessed government has given in to pressure from the oil industry and opened the door to making taxpayers pick up the costs of cleaning up after them.
“This is part of a trend by this backward-looking Luxon government which has allocated $200m to help invest in new gas fields.
“Last month, it brought embarrassing shame to New Zealand by pulling out of the international Beyond Oil and Gas coalition, which has pledged to phase out fossil fuels.“
“New Zealand will have energy security, lower prices and low emissions by investing in solar, wind, geothermal, storage, efficiency and demand side management. That is our future, not the nonsense being promoted by Luxon and Shane Jones.”
Resources
The Tui oil field decommissioning project https://www.mbie.govt.nz/building-and-energy/energy-and-natural-resources/minerals-and-petroleum/tui-project
The 2021 amendments to make oil companies responsible for decommissioning costs: