Oil, gas insurance levels 'inadequate'

Energy and Resources Minister Gerry Brownlee. Photo / Mark Mitchell.

A review of rules covering New Zealand's offshore oil and gas exploration regime has found compulsory minimum levels of insurance for operators would be inadequate in a major accident.

A review, ordered after the Deepwater Horizon disaster in the Gulf of Mexico, also found several areas where health safety and environmental rules need to be tightened in the exclusive economic zone (EEZ) which covers an area of 4.4 million square kilometres.

"A vital issue is whether New Zealand's insurance and regulatory regime adequately protects New Zealand in the event of a major accident or event such as an oil spill," the review says.

Compulsory insurance of $30 million would be "seriously inadequate" in the event of a major oil spill that threatened the coastline or other marine resources.

Energy and Resources Minister Gerry Brownlee said operators had strong incentives to ensure they were well insured because of the money they spent on equipment.

"The idea that they might be sloppy without adequate insurance is not right. We have to set that balance - that exercise will be looked at," he said.

The review says there is a major gap in the absence of a requirement for any form of environmental assessment in New Zealand's EEZ for petroleum activities or for other similar activities such as seabed mining.

Brownlee said there were now discussions about the Environmental Protection Agency extending its scope to cover the area.

The review also calls for a beefed up Department of Labour inspectorate for the exploration sector.