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No Treasury advice on oil and gas exploration ban

Article – BusinessDesk

Finance Minister received no Treasury advice on impact of oil and gas offshore exploration banFinance Minister received no Treasury advice on impact of oil and gas offshore exploration ban
By Rebecca Howard

June 6 (BusinessDesk) – Finance Minister Grant Robertson told a parliamentary committee that Treasury provided no advice about the potential fiscal or economic risks from banning future offshore oil and gas exploration licenses.

“The advice that I have received from Treasury is that the uncertain nature of revenue associated with oil and gas exploration means that they don’t include that in forecast revenue.. once it is inside the economy then you can make judgments about it. ” Robertson said in response to questions from National Party spokesperson for finance Amy Adams at the Finance and Expenditure Select Committee.

He also underscored that the forecasts contained in the latest budget wouldn’t change because existing permits remain in place and exploration is underway.

Beyond that “they don’t know the fiscal implications of not developing an unknown oil and gas reserve,” he said. The finance minister underscored that “it is impossible to factor in something where you don’t know the outcome of the exploration.”

The oil and gas industry was surprised in April when the government ended new offshore exploration permits and triggered claims the ban will make firms reconsider current and future plans. Ministers claim the ban won’t stifle existing investment and is simply the start of a 30-year transition away from fossil fuels in pursuit of a net zero emissions economy by 2050.

Yesterday it emerged that the move was made without a formal Cabinet paper and with minimal analysis from officials, according to a dump of documents and emails from Energy and Resources Minister Megan Woods.

The documents released also show no evidence of ministers seeking to consult the oil and gas sector, as has previously been claimed had occurred. Ministry of Business Innovation and Employment officials briefed sector participants on the decision the day before its announcement, reporting reactions in emails late on April 11 as variously “mature/subdued” and “disappointed/resigned/philosophical’ with “no red flags so far”.

In a statement after the FEC meeting Adams said it is “staggering” that the government commisioned no analysis from the Treasury and charged the ban will have a “double whammy of a downturn in exploration activity and rising wholesale prices that will both dampen economic growth, particularly in our regions.”

(BusinessDesk)

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