The New Zealand Government allocates petroleum exploration permits in an annual tender called a ‘Block Offer’. This enables efficient allocation of exploration acreage, incorporating the views of industry and stakeholders.
The modern Block Offer tender process has improved New Zealand’s profile among international investors. We stimulate competitive interest so we can award exploration permits to the bidder with the best work programme (and the ability to deliver it).
Block Offer process
New Zealand has run annual Block Offers since 2012. We select the release areas for Block Offers based on their prospectivity and commercial interest and from 2013, companies have been able to bid for their own block outlines based on a graticular system within each release area.
Before we announce the Block Offer:
- we first ask industry to nominate areas to include in the allocation,
- then consult with iwi and hapū in the proposed areas,
- we also discuss the proposed areas with local government. (Note that areas listed under Schedule 4 of the Crown Minerals Act 1991 are automatically excluded from the Block Offer).
Information gathered during consultation guides the Minister’s decision on the final make-up of the Block Offer. This helps to ensure we identify sites of cultural, historical or environmental value. A report and recommendations are then provided to the Minister of Energy and Resources.
Block Offer bids
The release areas are announced when Block Offer bidding opens, usually in April each year. Once bidding closes (usually around six months later) we assess the bids based on their proposed work programme, and criteria including the applicant’s technical and financial capability and likely capability to meet expected health, safety and environmental requirements in accordance with the Invitation for Bids.
An exploration permit is awarded to enable research into where commercially recoverable reserves of oil and gas may be. Exploration activities can include sampling, aeromagnetic surveys, geological studies, compiling reports and seismic surveys and well drilling. Permits can be granted for up to 15 years.
Once operators are granted a permit they must arrange consents before they proceed with any exploration activity. For an overview of the consents required see the Guide to the Management of Petroleum and Minerals [PDF 103KB].
Block Offer 2015 opened in March and bids closed in September 2015.
The Minister for Energy and Resources opened consultation on a proposal for Block Offer 2016, to be launched in March 2016.
Historically petroleum exploration permits in New Zealand were granted through a priority in time (PIT) system, where operators identified an area they wanted to explore and applied for a permit. Between 2003 and 2012 New Zealand ran a number of Block Offers.