NZ plummets in energy investment ranking, Government happy

New Zealand has dropped from 14th to 46th in a ranking of attractiveness to energy investors. This isn’t surprising after the Government put significant limitations on oil and gas exploration.

‘Green’ or alternative energy prospects don’t seem to rate – I’m still unclear how we will meet al our energy needs if we transition away from fossil fuels completely as some want.

NZH:  Survey of top energy executives shows NZ has become a lot less attractive for investors

An annual survey of the world’s leading oil executives, which ranks the ease of investment into oil and gas producing countries, shows New Zealand has dramatically dropped down the list in terms of its attractiveness to investors.

The Fraser Institute, which has run the survey every year for 12 years, asks executives to rank provinces, states and countries according to the extent to which barriers to investment in oil and gas exploration and production are present.

New Zealand’s attractiveness to investors has dropped from the 14th highest country/region to 46 in the space of a year.

“This drop is based on poorer scores with respect to political stability, environmental regulations and protected areas and taxation in general,” the report said.

The Opposition is critical.

National’s Energy spokesman Jonathan Young put the blame for the drop squarely in the lap of the Government.

In April, Prime Minister Jacinda Ardern banned future offshore oil and gas exploration in New Zealand with the exception of Taranaki.

The ban took the industry by surprise because it was not part of any confidence and supply or coalition agreement and had not been explicitly promised by Labour during the election campaign.

According to some industry players surveyed in the Fraser Institute report, this was a key reason for the drop in New Zealand’s attractiveness.

“New Zealand’s move to ban new offshore exploration is a deterrent for investors,” one said.

“Jurisdictions that are openly hostile towards resource development, like New Zealand, cause investors to take their investment dollars elsewhere,” said another.

Young was not surprised by this and said the ban had “scared off” potential investors and would cost the economy tens of millions of dollars.

It’s not surprising – it looks like to an extent at least it was the intent of the ban, or it must have been at least a predictable consequence.

Energy Minister Megan Woods is unrepentant:

“We’re incredibly proud of the fact that New Zealand is leading the world on a managed, long term transition to a clean energy future.”

Hardly. The Government has limited fossil fuel exploration possibilities, but I have seen little of the other side of the equation – alternatives.

“International investors will consider a range of information when making decisions about where to invest, including the likelihood of a discovery and the likely value of any potential discovery.”

Climate Change Minister James Shaw was not surprised by the survey.

He said because oil and gas exploration was being phased out in New Zealand, there was not actually much more investment in the sector that was needed.

“So it’s unsurprising that investors in that industry would be saying that over the long term it’s not a place they wanted to end up.”

Shaw needs to come up with a credible path to sufficient alternative energy to replace fossil fuels, otherwise we will either have an energy shortfall, or will have to rely more on more expensive imports of fuel.

I’d love to see polluting fuels phased out, but I would also love to see a realistic and viable plan for what will replace them. At the moment I see little more than pie in the sky idealism.

Energy of dreams – ban them, and alternatives will come. Maybe.