$60b of oil off New Zealand coast?

The Government is rolling out the welcome mat to foreign oil explorers as new estimates show the country could be sitting on $60 billion of untapped black gold.

Energy and Resources Minister Gerry Brownlee said yesterday that by 2025 the amount of now untapped oil and gas off the coast could be worth about $30b a year in export receipts.

Mr Brownlee said the tax receipts would amount to about $10b a year – enough to wipe out the current cash deficit.

The data is in a series of reports released by the Government yesterday. Chief among them is a survey of oil and gas reserves by GNS Science, which says there could be as many as 6.5b barrels of undiscovered oil in 10 areas off the coast, stretching from the Great South Basin to Cape Reinga.

At current market value, that is worth about $67b.

The oilfields would dwarf anything previously discovered in New Zealand. The Maui and Tui fields, whose output last year made oil the country's third-largest export earner, hold about 150 million barrels.

GNS also believes there could be about 40 trillion cubic feet of natural gas in the same 10 areas.

The most lucrative areas are thought to be the Great South Basin, Deepwater Taranaki and Canterbury.

Another report to the Government by private sector analysts McDouall Stuart recommends setting up a national oil company, owned by the Crown, to manage the potentially enormous resource.

Other options suggested include the Crown underwriting oil drilling equipment and infrastructure, directing state-owned energy companies such as Genesis or Solid Energy into oil exploration, and requiring the Superannuation Fund or ACC to invest in oil futures.

Mr Brownlee said it was too early to make decisions on how the Government would proceed, but he had called for a review of the Crown's ability to manage the petroleum estate.

He also announced the Government was reconsidering the tax and regulatory framework of the petroleum sector to make investment more attractive for foreign oil explorers.

"New Zealand's largely unexplored petroleum resource could be one of the country's most significant economic opportunities," Mr Brownlee said. "The industry has been neglected by successive governments for far too long, and when you see the potential that's there it's sort of a little bit of a surprise."

Mr Brownlee's enthusiasm for oil exploration comes hard on the heels of moves to open up parts of the conservation estate to mining, which the minister also believes could put billions into the Crown coffers.

Mr Brownlee said the Government saw oil and gas playing a big role in getting the economy out of deficit. "We very much want to send the message that New Zealand is prospective for hydrocarbons and open for business."

This summer would see the most oil exploration yet undertaken in New Zealand waters, and the Government wanted to encourage more.

NZ Oil and Gas said any moves to open up the possibility of joint ventures with foreign investors were good news. Drilling for oil was risky and expensive, but the potential benefits were huge.

But the Greens are worried a sudden expansion of exploration could see the sector develop without proper environmental safeguards. Co-leader Russel Norman said the move also flew in the face of Government rhetoric on climate change.

"On the one hand they're talking about reducing carbon emissions, and on the other releasing millions of tonnes of hydrocarbons into the atmosphere."

The Greens want the Government to set up an oil fund where the receipts of any oil boom should be channelled, and which could be used for capital assets.

- © Fairfax NZ News