Greenpeace not satisfied with proposed $1.2 billion oil industry insurance cover

Greenpeace is not satisfied with a proposed rise in the financial level oil and gas companies would need to be insured for to clean up potential oil spills.

Associate Transport Minister Julie Anne Genter announced the $1.2 billion maximum level of insurance in June. It would require oil companies to hold levels of insurance proportionate to the risk posed by an oil spill.

The proposed law would dramatically increase the current requirement of oil and gas companies, which is to hold insurance worth around $27 million.

Greenpeace campaigner Amanda Larsson said at a select committee on Thursday that the $1.2 billion was still "too low" and that New Zealanders would end up footing the bill in a major oil disaster.

Genter has said the likelihood of a major oil spill is low, but if one occurs it could have significant environmental, financial and cultural impacts and cost tens or even hundreds of millions to clean-up.

She said the estimated financial insurance for current production installations in Taranaki ranges from about $170 million to $360 million.

But Larsson pointed to the 2010 Deepwater Horizon oil spill in the Gulf of Mexico, considered being the largest marine oil spill in the history of the petroleum industry.

As of 2018, clean-up costs, charges and penalties had cost BP - the company responsible for the spill - more than US$65 billion.

Greenpeace campaigner Amanda Larsson speaking at the launch of Greenpeace’s Solarise NZ energy vision launch.
Greenpeace campaigner Amanda Larsson speaking at the launch of Greenpeace’s Solarise NZ energy vision launch. Photo credit: Greenpeace

National MP Jonathan Young questioned Larsson at the select committee, asking her if it was realistic to expect such a massive event to unfold in New Zealand.

She said while an event of that scale was unlikely, "The consequences of an event like this would be catastrophic."

New Zealand's worst oil spill occurred off the cost of Tauranga in 2011 caused by the grounding of a container ship owned by a Greek shipping company.

The Greece-based owner of the Rena cargo ship, Daina Shipping Company, spent a reported $235 million on the clean-up. 

Greenpeace has strongly advocated against oil companies operating in New Zealand, such as Austrian oil giant OMV, described by Greenpeace as "climate criminals".

The company did not wish to appear before the select committee, said in a submission online that it supported the legislation.

It said it was "reasonable to impose a strict, unlimited liability on the owners of offshore installations in the event of incidents and to require those owners to demonstrate financial assurance for potential impacts".

OMV is New Zealand's largest producer of gas and liquid hydrocarbons. It operates the Maari, Māui and Pohokura offshore fields in Taranaki, as well as several current offshore exploration permits.

It will begin exploratory oil and gas drilling off the coasts of Taranaki and Dunedin this summer, despite the Government banning offshore oil and gas permits last year.

The Government announced that existing offshore oil and gas permits would run their course.