Maritime Transport (Offshore Installations) Amendment Bill

on behalf of the Associate Minister of Transport: I move, That the Maritime Transport (Offshore Installations) Amendment Bill be now read a third time.

It’s my pleasure to stand on behalf of the Associate Minister of Transport Julie Anne Genter to speak to this third reading of the Maritime Transport (Offshore Installations) Amendment Bill. I want to take the opportunity to thank everyone who has contributed to the development of the bill in its passage through the House, including the officials in the Ministry of Transport, of course the Transport and Infrastructure Committee, and all of the submitters who have helped us refine the bill.

The Maritime Transport Act basically operates a user-pays, or, I should say, polluter-pays, regime. In simple terms, this means that the owner of offshore installations like those at the Maui and Pohokura oil and gas fields have an unlimited liability for the costs of any pollution damage from their installation. So if something goes wrong, particularly with deep-sea installation, it can go really wrong, and the consequences can be catastrophic for New Zealand’s marine environment. That’s why the Government has taken this issue so seriously. The owner’s liability in this sort of situation is extensive. It includes the costs of any clean-up and, importantly, reinstatement and the impairment of damages to the environment.

The main objective of this bill is to clarify and strengthen the requirements that are placed on the owners of offshore oil and gas installations to hold insurance or equivalent cover for their liabilities in the event of an oil spill. There’s not much point in having that liability if companies are not required to hold insurance to the level that would allow them to properly respond to the damage and the consequences of a spill in an offshore installation. This bill doesn’t change the legal situation at all, regarding the owner’s liability. However, what it does do is it makes a trade-off between the current regime, which requires third-party assurance for all pollution risks but subject to what we believe is a totally inadequate amount of around $27 million, and the regime proposed in this bill and the associated rules, which will require third-party assurance for the key risks and costs to a level that can be expected to cover those risks up to $1.2 billion.

The key risks and costs covered will include costs arising from pollution damage, the costs of clean-up, and the costs of reinstatement arising from an out-of-control well. If we are going to continue to allow oil and gas exploration under the current permits, and to continue to extract oil and gas from fields like Maui and Pohokura, we owe it to New Zealanders now and in the future to ensure that we require the best cover that we can get. I commend this bill to the House.

Thank you, Madam Speaker, for the opportunity to speak on this third reading of the Maritime Transport (Offshore Installations) Amendment Bill. Like the previous speaker, the Hon Phil Twyford, we too, on this side of the House, take this very seriously. In fact, we did a tremendous amount of work preparing for this bill before the last election. Of course, the election came along and then the responsibility for continuing that work fell to the Government. Thank you for the work that they have done.

Can I say, the people of Taranaki, who have a number of these offshore installations surrounding them in our vicinity, and also particularly the sector itself, take this to be a very serious matter, that not only do we have agreement and unlimited liability to these companies but we have financial assurance, or we have a financial security to ensure that that which they are liable for they also have a provision to meet those costs.

So we certainly do support not only world’s best practice in terms of any exploration that happens offshore, but we also ensure that in our jurisdiction they do carry the financial ability to put right anything that does occur.

The Minister in charge of the bill, the Hon Julie Anne Genter, presented to the House Supplementary Order Paper (SOP) 417 yesterday, and we had a look at that. It was a last-minute SOP, and it would allow rules to cancel certificates of insurance before their expiry. This SOP is to allow the Government to require summer 2019-2020 drilling to comply with the new financial assurance rules. Though it does seem poor for the Crown to override its existing insurance certificates rather than let them run their course, the sector has expected for some time that the summer drilling programme would require compliance with the new regime. So there is an acceptance of that and a preparedness for it. And, even though the potentiality of Government regulation and rules cutting across what were previously accepted practices and limits, we do note that there is sensitivity around this particular area, and we were happy to vote for that SOP.

So the regime’s primary focus, of course, is to prevent hazards and discharges from occurring. New Zealand does have very strong regimes in that regard. It ensures that permit holders have sufficient plans and resources in place to decrease the likelihood of any adverse event. The likelihood of a major marine oil spill is very low. We always are shown examples of what happened. Of course, many, many years ago in the gulf in the USA—of course, that’s a completely different pressure system than New Zealand has; completely different environmental environments and seascapes. However, it is very important that we have in place the right regime and all the different factors and enablements to ensure that if anything did happen, we could respond to face those issues and also protect the interests of third parties as well.

So we are supportive of this bill. We are supportive of the SOP. We believe that this will once again enable us to have world’s best practice in the exploration programme and regime that New Zealand supports. Thank you for the Minister’s comments that “If we were to continue to support exploration in those permitted areas”. Of course, I would remind him that the Government promised to protect existing permits. So it’s not a question that he should ask; it is something that he should state: that that is the regime in which the sector operates under under the promise of protection of this Government to protect those permits. I’m very happy to commend this bill to the House. Thank you.

Kia ora e Te Mana Whakawā. It is a privilege to stand here and make a contribution in the third reading of the Maritime Transport (Offshore Installations) Amendment Bill. Currently, operators are only required to hold insurance worth $27 million. This level of coverage is far too low to cover the clean-up and compensation cost of significant oil spills. As we’ve seen in the Rena oil spill, for example, it cost the taxpayer $47 million to clean up. So this will rectify that.

Before I sit down, it’s my sister’s birthday today. So I’d just like to wish Evanjica Kanongata’a a happy birthday, and that’s my gift. Ka kite. I commend this bill to the House.

Bill read a third time.