Offshore oil: never mind the gap

Gerry Brownlee, in his haste to scrape the bottom of the oil barrel, is showing some disregard for Maori that is not mana-enhancing

“Our prime purpose is with regard to petroleum. I think some people are interested,” said Rt Hon Keith Holyoake, in 1965, introducing the Continental Shelf Act.

Brownlee probably sleeps with it under his pillow. All Hon Members, in debate on that Act, talked up the need for legal certainty, to encourage big oil investment to New Zealand. Their intent, to vest exclusive rights in the Crown to manage offshore oil exploration and exploitation, was quite clear.

David Clendon for the Greens, though, is valiantly whipping up uncertainty. This is the third instance in about as many weeks of gripes between Brownlee and Maori about inadequate consultation on mineral mining and drilling proposals. Te Aupouri had expressed an interest in the Reinga Block; Brownlee went ahead and issued the offer anyway, says Clendon, contrary to the advice of his own officials to the Waitangi Tribunal. He wonders if Brownlee has broken the law, or short of that, whether it is another confiscation.

Because there’s an odd gap in the law. The Continental Shelf Act gives the Crown the right to issue permits and take royalties. What it seems not to do, though, is vest ownership of the oil itself.

The Crown Minerals Act, which does nationalise petroleum, stops at the outer limits of the territorial sea, 12 nautical miles offshore. Section 4 of the Continental Shelf Act extends its application: it says that all the provisions of the Crown Minerals Act 1991, except section 10, apply with respect to petroleum in the seabed and subsoil of the continental shelf.

Section 10 is the one that declares petroleum, uranium, gold and silver in land to be the property of the Crown.

Prior to the Crown Minerals Act, the Petroleum Act 1937 did the same job; in 1991, when it was repealed, the outdated Continental Shelf reference was simply replaced, verbatim. Perhaps the drafters considered that importing a provision confined to “the limits of the territorial sea” would be confusing, in the context of a government expressly taking control beyond that.

More likely, Clendon’s right: there's a gap. But anyway, if possession is nine-tenths of the law, with sole rights to administer access, the Crown has to all intents and purposes extinguished the rights of whoever else might own the oil.

All rights with respect to the continental shelf and its natural resources for the purpose of exploring the shelf and exploiting those resources are vested in the Crown, under section 3 of the Continental Shelf Act.

No use to Maori, therefore, to argue that they own the oil. If they wished to exploit it, or even exercise their prerogative to leave it well alone, such rights would have been extinguished back in 1965 when the Crown took control — not by the Reinga Block offer.

Here’s Holyoake again, describing his government’s purpose:

The purpose and the central feature of the Bill is that it establishes that a coastal State … has the exclusive right to explore its continental shelf and to exploit its natural resources … It includes the seabed and the subsoil under water deeper than 200 metres, provided that the natural resources can be exploited … Oil companies are now actively interested in obtaining similar licences under the Petroleum Act in respect to areas outside New Zealand territorial waters. That is very encouraging to us, particularly when we know that this work is very costly indeed. If the oil companies are interested and prepared to spend huge sums of money … then it is reasonable that they should have the protection of exclusive licences in respect of the areas in which they are interested, and of course we must, to enable us to give those licences, claim the rights to the soil and the subsoil under the sea in these areas.


We expect there will be the possibility of exploiting petroleum on the continental shelf. No large organisation anywhere in the world would contemplate considerable expenditure on oil search unless it had rights granted by the coastal State concerned, so this Bill is essential. A coastal State must assume these rights before the exploitation can be started. … We take these powers so we can then give licences and legal rights to people who are unlikely to operate and spend any considerable amount of money unless they have those legal rights granted by a coastal State.

Dr Finlay (Waitakere) said:

we on this [Opposition] side of the House approve of the principle of this Bill … we are now seeking to vest the ocean floor in the Government for the people of New Zealand as a whole … adopting the principle that these measures, and indeed the one we have before us now, are of such importance that it is of public concern that the Government should reserve to itself the sole right of dealing with matters with which it is concerned, although perhaps, as has been suggested as an inevitable step for it to take, to farm out the exploitation of this area to private individuals with, of course, appropriate royalty rights being paid to the State.

Mr Whitehead (Nelson) asked:

Sir, could the Prime Minister tell us who would be the appeal authority if there was a conflict of interests, say, between the fishing people and the people interested in the exploration for petroleum? If … a conflict of interests arises, who would be the authority to resolve the dispute?

Holyoake replied:

The settlement of disputes will be a matter for the New Zealand Government. As the Crown takes the proprietorial rights, I cannot see any dispute arising. Anybody claiming would claim against the New Zealand Government.

It could be, one imagines, an aspect of ongoing discussions on the new shape of the Foreshore and Seabed Act. But drawing from what we know so far (here and here and here, for example), there seems no prospect of invoking the new ‘customary title’ concept, and petroleum is off the table.

Brownlee’s downplaying [question 10] his official’s comments relied on by Clendon, saying they “came at the end of a very long cross-examination in front of the Waitangi Tribunal, and I do not want to make any comment,” and reiterating that all the Continental Shelf Act did was give effect to UN conventions ratified by New Zealand: it follows the text of the Convention on the Continental Shelf done at Geneva in 1958, for example. If that clashes with other conventions (or declarations), he effectively said, don’t come crying to me.

When asked if he ruled out paying compensation to iwi for the confiscation of petroleum resources, he hedged, and obliquely seemed to acknowledge some risk, saying he could not bind any future government. But I reckon he’s game to brazen it out, if he can — worst case, counting it as a business cost.

If there’s a problem here, it’s as much about perceptions as legal rights: Brownlee’s cavalier treatment of Maori is not 'mana-enhancing'. I doubt that he minds too much: running into an election year, iwi-kiwi vote-enhancing is maybe no less important.