Crown Minerals Act 1991
The Crown owns the in-ground petroleum resource and any company wanting to prospect, explore or mine petroleum in New Zealand must obtain a permit from New Zealand Petroleum & Minerals under the Crown Minerals Act 1991. This includes petroleum in New Zealand's Exclusive Economic Zone and extended continental shelf.
The Crown Minerals Act 1991 governs the allocation of rights to and the management of all petroleum in its natural state, and also sets out the process for reaching a land access arrangement.
The Act will be amended on 24 May 2013 by the Crown Minerals Amendment Act 2013.
The Petroleum Programme 2013 (Minerals Programme for Petroleum 2013) takes effect on 24 May 2013, and sets out:
- how the Minister of Energy and Resources and the chief executive of the Ministry of Business, Innovation and Employment will have regard to the principles of the Treaty of Waitangi (Te Tiriti o Waitangi) for the purposes of the Petroleum Programme
- how the Minister and the chief executive will exercise specified powers and discretions conferred on him or her by the Crown Minerals Act 1991, including the granting of permits and the making of changes to permits
- how the Minister and the chief executive will interpret and apply specific provisions in the Act or regulations made under the Act
- that defined areas of land of particular importance to an iwi's or hapū's mana are excluded from the operation of the Petroleum Programme or are not to be included in any permit
- general guidance on the Act and those regulations.
Current permits granted under a previous minerals programme will continue to be managed under that programme, until a change to the permit is requested or the permit holder opts into the new Petroleum Programme. Applications pending on 24 May 2013 will be considered under the new Petroleum Programme.
Previous Petroleum Programmes
- Minerals Programme for Petroleum 2005 [975 kB PDF]
- Minerals Programme for Petroleum (1 January 1995) [295 kB PDF]
- The Crown Minerals (Royalties for Petroleum) Regulations 2013 set out rates and provisions for the payment of royalties on petroleum production from initial permits granted after 24 May 2013. These regulations also set out royalty statement and royalty return requirements for all petroleum permit holders.
- The Crown Minerals (Petroleum) Regulations 2007 specify information permit/licence holders must supply. They will be amended on 24 May 2013 by the Crown Minerals (Petroleum) Amendment Regulations 2013.
- The Crown Minerals (Petroleum Fees) Regulations 2006 outline fees payable for petroleum under the Crown Minerals Act 1991.
The Crown Minerals (Royalties for Petroleum) Regulations 2013 set out rates and provisions for the payment of royalties on petroleum production from initial permits granted after 24 May 2013. The royalty terms and conditions for permits granted before 24 May 2013, and any subsequent permits to those existing permits, is determined by the relevant minerals programme.
New Zealand’s internationally competitive royalty regime stipulates the payment of either an ad valorem royalty (AVR) or an accounting profits royalty (APR), whichever is the greater in any given year.
The royalty rates are either:
- 5% AVR, that is 5% of the net revenues obtained from the sale of petroleum, or
- 20% APR, that is 20% of the accounting profit of petroleum production.
If a discovery was made between 30 June 2004 and 31 December 2009, the following applies:
- AVR of 1% for natural gas
- APR of 15% on the first NZ$750 million cumulative gross (offshore) or 15% on the first NZ$250 million cumulative gross (onshore).
In calculating the accounting profit deductions are made and may include associated production costs, capital costs (exploration costs, development costs, permit maintenance and consent costs and feasibility study costs), indirect costs, decommissioning costs, operating and capital overhead allowance, operating costs and capital costs carried forward and decommissioning costs carried back.
Before a company can undertake certain activities, e.g. exploration drilling, they must comply with the appropriate environmental legislation.
Onshore and offshore - up to 12 nautical miles from the coastline
Local authorities manage environmental consenting processes in their region under the Resource Management Act (RMA).
Offshore - more than 12 nautical miles from the coastline
Activities more than 12 nautical miles from the coastline will need to comply with new legislation that is expected to come into force in June 2013, managed by the Environmental Protection Authority.
Other marine protection
Our marine environment is also protected under the Maritime Transport Act 1994, and the marine protection rules that come under the Act. This legislation applies to vessels, installations and ports, and is managed by Maritime New Zealand and by local councils.
The Biosecurity Act 1993 provides for clearance of goods and management of incoming craft (including floating platforms) to reduce the risk of pests and diseases being introduced.
The Ministry of Business, Innovation and Employment's High Hazards Unit administers the following legislation:
Following a recent review, new updated regulations for the oil and gas industry are expected to come into force 1 June 2013.
The Petroleum Digital Data Submission Standards [125 kB PDF] define acceptable formats for the lodgement of statutory digital information acquired by operators whilst undertaking prospecting, exploration and mining activities.
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