In the April update to our Energy Blog, we drilled down into some of the regulatory details worth considering for parties applying for exploration permits or acquiring existing permits.
This time, inspired by OMV's announcement that it is exploring the possibility of selling its oil and gas exploration and production assets in New Zealand, we will focus on consent requirements relevant to any transferee of those assets.
Any potential purchaser of those assets will need to keep in mind:
Consents under Crown Minerals Act 1991 and Petroleum Act 1937
The requirement for consent from/notification to the Minister of Energy to the change of control of the relevant permits, noting:
- this will include the usual focus on operator capability, financial capability, and health and safety, given OMV New Zealand is the operator of the Maui, Maari and Pohokura fields (and its exploration permits);
- the 2021 changes to the Crown Minerals Act and the further changes pending under the Crown Minerals Amendment Bill* are likely to result in greater focus on the liability for decommissioning (and financial security to ensure the ability to discharge that liability); and
- the process is different for the transfer of the Maui assets, as opposed to the rest of the fields/permits, as the age of Maui means it is governed by the Petroleum Act 1937, while the others will be under the Crown Minerals Act 1991.
Consent under the Overseas Investment Act 2005
The requirement for consent under the Overseas Investment Act 2005, given OMV's assets are highly likely to include sensitive land, and we assume will meet the value threshold to also be a "significant business assets" transaction (generally being assets worth more than NZ$100 million, with certain jurisdiction-specific thresholders eg NZ$586 million for Australian non-government investors, NZ$200 million for non-government investors from countries that are party to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership).
Resource Management Act 1991 / Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012
Consents that may be required once the business has been acquired, such as resource consents under the Resource Management Act 1991 and/or marine consents under the Exclusive Economic Zone and Continental Shelf (Environmental Effects) Act 2012. In particular, consents under these acts will be required for new, expansion or decommissioning activities.
Joint operating agreement and other contractual consents
We expect that consent would be required under the joint venture operating agreements for Maari and Pohokura, and potentially under land-related agreements and major supply contracts. The relevant agreements will include process and timing requirements for obtaining these consents.
Our thoughts
As always, while the above requirements will need careful management, we are of the view that they can be navigated by committed and reputable applicants/transferees with a strong balance sheet and a track record of operational capabilities. Nonetheless, we expect there to be conditions precedent in any transaction documents in relation to the obtaining of these consents.
Applicants for consents for the transaction should compile all of the required information early in the process, to facilitate early and efficient engagement with New Zealand Petroleum and Minerals and the Overseas Investment Office. This allows sufficient time to work through any issues, and prevents delays as a result of either consent authority having to request additional information part way through the process. This will also help the parties with obtaining the consents within the relevant condition period(s).
*The Crown Minerals Amendment Bill commenced its second reading on 8 June 2023, and proposes (amongst other matters) to add the requirement for the Minister to be satisfied that the transferee is highly likely to satisfy their decommissioning and post-decommissioning obligations under the Crown Minerals Act.
This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. If you require any advice or further information on the subject matter of this newsletter, please contact the partner/solicitor in the firm who normally advises you, or alternatively contact one of the partners listed below.