Outgoing guarantees
An outgoing guarantee may be required to provide financial assurance that help ensure future decommissioning obligations can be met when an interest in a permit or licence changes. It may be required from the outgoing party to protect the Crown if the incoming party cannot meet future decommissioning costs.
Deciding if an outgoing guarantee may be required
The Minister for Resources and the Minister of Finance jointly consider if an outgoing guarantee is required when there is a relevant change in a permit’s conditions. Outgoing guarantees are not automatic.
The decision on whether one is required is made on a case‑by‑case basis when considering approval of a:
- transfer of a permit or licence
- change of operator
- transfer of participating interest, or
- change of control.
How the Ministers assess for outgoing guarantees
When assessing whether a guarantee is needed, Ministers may consider factors such as:
- proximity to decommissioning
- remaining recoverable resources and expected revenue
- the financial capability of the outgoing and incoming parties
- existing financial security arrangements, and
- any risks that could affect the permit holder’s ability to meet future decommissioning obligations.
Outcomes the Ministers may decide after their assessment
After assessing all relevant factors, Ministers will decide either to:
- require an outgoing guarantee be put in place, or
- conclude that no outgoing guarantee will be required.
When Ministers decide an outgoing guarantee is required
If an outgoing guarantee is required, the Ministers determine its nature and extent. These obligations then become a condition of approving the change in permit. The Ministry of Business, Innovation and Employment (MBIE) may continue to monitor the outgoing guarantee arrangements after the permit change has occurred.
When no outgoing guarantee is required
Where Ministers are satisfied the incoming permit holder can fully meet their obligations, and risk to the Crown is low, an outgoing guarantee is not required, and the approval can be given for:
- a transfer of a permit or licence
- a change of operator
- transfer of participating interest, or
- change of control.
See more about outgoing guarantees: Crown Minerals Act 1991 – New Zealand Legislation