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Low oil prices leading to falling interest in New Zealand exploration

Xinhua, December 16, 2015 Adjust font size:

Lower oil prices have seen the oil and gas industry reduce their exploration in New Zealand, Energy and Resources Minister Simon Bridges said Wednesday.

Announcing the controversial award of nine new oil and gas exploration permits - three onshore and six offshore - Bridges said this year had been challenging for the sector, with the global commodity price being lower for longer as a result of increased supply and decreased demand.

The permits, all in the Taranaki Basin on the west of the North Island, collectively comprised a committed work program expenditure of 4.4 million NZ dollars (2.97 million U.S. dollars), with the potential of more than 364 million NZ dollars (245.59 million U.S. dollars) if all contingent work was realized.

"Over the past year we have seen some operators seeking to defer or alter their work programs, as they rethink their commitments. Of course these changes happen fairly regularly for a range of reasons, which may or may not be linked to oil prices, but price has to, generally speaking, be a significant factor," Bridges said in a published speech.

The low prices had also hit government revenues, with oil and gas royalties falling around 100 million NZ dollars (67.57 million U.S. dollars) to 258 million NZ dollars (174.33 million U.S. dollars) in the last financial year.

Environmental groups and opposition lawmakers said the awarding of the permits showed the government had no intention of living up to the Paris agreement to halt climate change.

"Oil is last century's fuel and we simply cannot afford to drill for more of it if we're going to achieve the goal agreed to in Paris, which is to drastically cut climate pollution caused by burning fossil fuels," Green Party energy spokesperson Gareth Hughes said in a statement. Endit