After years of stagnation, New Zealand's interest in gas exploration is picking up.

Seven oil and gas companies are racing to secure offshore rights to explore in New Zealand before a national vote that could lead to the ban of new permits. The country's main parties are fighting over the need for gas.

New Zealand attracted interest after its conservative government lifted a ban last year on new offshore drilling imposed by 2018. The goal was to avoid gas shortages in industrial areas and boost power generation during dry years, when hydropower output drops.

In May, the country produced 7,6 petajoules (PJ) of gas. This was mainly from fields which are or will soon be declining. The government reported in January that gas reserves will drop 23%, to 731 PJ by 2025.

The gas is all used in New Zealand. According to Energy Resources Aotearoa, if there were more gas available, the demand would increase by 100 PJ per year.

According to industry and government, the former government of Jacinda Ardern, which prohibited offshore?bids, discouraged investment. The same was true for long delays in obtaining environmental approvals.

After the offshore ban came into effect, Chevron and Equinor both gave up their exploration permits.

"We've become a bit jammed up at one end." "We've got mature and old fields near the end of their life at one end," said ERA Chief Executive John Carnegie.

"We've had a gap of seven years because of the ban." He said that we are rebuilding the entire sector from scratch.

New Zealand set up a fund of NZ$200m ($117m) last year to help operators with projects. This included extracting more?gas from mature?reservoirs. No new permits have yet been issued.

A PROMISING FIND

Sunda Energy, based in the UK, Pancontinental Energy of Australia and EnZed (privately owned) have all received grants and are waiting for formal permits. Three New Zealand companies are working together to secure a second permit, and CBX Energy has been working on securing a permit for the Canterbury Basin off the South Island.

Three months is the time limit for competitors to come up with superior plans of work in the same area.

EnZed and Sunda are both targeting the Taranaki Basin, which is the only offshore producing basin in the country. It has extensive subsurface data as well as known gas discoveries.

Andy Butler, Sunda's CEO, said: "We find it an interesting discovery. We'd love to work with it."

Smaller explorers are attracted to the country, especially in a time of confusion and consternation in the industry due to Australia's?gas policy.

Neil Young, founder of EnZed, said: "I believe that Australia's domestic gasoline mess is a sign that capital investors are considering New Zealand as an alternative."

Shane Jones, Minister of Resources, said that investor confidence is returning.

He said, "It took us a long time to get the regulatory environment right. More recently, people have proven they are willing to take a risk and give it a try."

The explorers are looking to secure drilling rights before the New Zealand election in November, as the Labour Party intends to reinstate a ban on off-shore exploration while honoring existing permits.

Tangi Utikere, acting Labour Energy and Resources spokesperson said: "Labour will restore the ban on new oil and gas permits. It's the 'right' thing for New Zealand's security of energy and to bring down electricity 'bills in the long-term."

He said: "For existing permits we have stated that we will honour them. But we do not believe that the government should be subsidizing an outdated industry."

The polls show that the race for the presidential election is still too close to call.

(source: Reuters)