Massive oil rig liability a ticking time bomb

The Government faces a bill of up to $855 million over the next 25 years as New Zealand’s aging oil rigs come to the end of their life, the Green Party revealed today.

The Crown is liable for tax and royalty rebates equal to 42-48 percent of the total decommissioning cost for each of the five oil rigs in New Zealand waters, according to documents released to the Green Party under the Official Information Act. Energy and Resources Minister Judith Collins admitted in Parliament today that the total liability is estimated to be between $800 million and $855 million.

“This is a staggering amount of money that future taxpayers will have to provide to clean up after the oil industry has finished making its profits,” Green Party energy and resources spokesperson Gareth Hughes said.

“Government officials have warned the Minister that one of New Zealand’s aging oil rigs could be decommissioned soon, depending on the international oil price, and that comes at a huge cost to the government and the taxpayer.

“The Government often claims it is leading international work to phase out oil and gas subsidies, but now it’s planning for taxpayers to stump up the better part of a billion dollars to cover the oil industry’s backsides.

“We’ve got these aging oil rigs in our waters and it turns out not only do they carry the risk of an oil spill, they also carry a huge financial risk to taxpayers too.

“New Zealand has the fourth lowest tax and royalties level for oil exploration and production in the world. We can’t afford to be cleaning up after the oil industry too.

“The Minister said the industry has already covered the cost through the royalties it’s paid, but those royalties haven’t been ring-fenced so they’ve already been spent on other things,” Mr Hughes said.

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