Taxpayers foot bill for oil, gas search

Taxpayers are subsidising multinational oil and gas companies by undertaking millions of dollars of exploration work and giving away the information, the Green Party says.

Labour says the practice is "not unusual", while industry insiders say it could encourage big companies to take out permits in New Zealand.

The Government yesterday announced $136 million in scientific and research contracts through its funding arm, the Foundation for Research, Science and Technology (FRST).

The biggest contract, worth $18.6m over six years, went to GNS Science for geological mapping to find oil and gas around New Zealand.

The next biggest contracts went to Crown research institute Landcare Research $10.4m for "beating weeds" and $9m for invasive mammal impacts on biodiversity.

The contracts range from two to six years. Investment in the first year is $27.3m, compared with $141m in the first year of the 2008 investment round.

Green Party spokeswoman Jeanette Fitzsimons said there had been a big shift under the new Government to encouraging petroleum exploration and mining.

The research, paid for by the Government, would be given to oil companies to encourage them to drill in New Zealand waters, she said.

"It's a subsidy the taxpayer probably doesn't understand they make," Fitzsimons said. "It would be nice if they spent some on renewable energy."

Research, Science and Technology Minister Wayne Mapp said the research funding was "an investment in our own future".

"All it does is provide sufficient information to the oil companies to consider whether or not to do further work themselves," he said.

Labour spokeswoman Moana Mackey said the latest funding came after the Government had overturned a ban on thermal power plants and laws forcing a move towards biofuels, as well as a review of the emissions trading scheme, she said.

"The decision has to be in line with the Government's priorities and I would say, given the Government's performance in these areas, it is right in line," she said.

"There's been a lot of talk but very little action."

L&M Petroleum boss John Bay said the funding was good news for the industry and could be a tipping point for big companies. "It reduces their upfront exploratory cost to look at New Zealand."

He said there was "some merit" in the argument that big companies could conduct their own research, but New Zealand was competing with many other areas that were better equipped for oil and gas production, such as the Gulf of Mexico and the North Sea.

FRST spokesman Bill Boyd described the GNS Science contract as "one of the exciting projects".

"It's a good investment for New Zealand's future if it helps to find more deposits," he said.

The Government also announced environmental contracts yesterday.

Massey University's "high-efficiency organic photovoltaics" won $5.8m, BRANZ will spend $2.4m on "moisture and indoor environmental quality" and Industrial Research got $1m to investigate "CO2 capture technology".

Some of New Zealand's biggest polluting companies wrote to Prime Minister John Key and Cabinet ministers yesterday urging caution over setting a 2020 target for greenhouse gas emission cuts.

Signatories including the Greenhouse Policy Coalition and the New Zealand Business Roundtable warned companies could close down under an ambitious target.

"It is hard to see how we would avoid economic collapse," the letter said.

- © Fairfax NZ News