The proposal to increase the liability of offshore oil and gas operators is still a “drop in the ocean” compared to what a major oil spill would cost, says one non-governmental environmental organisation.
Last week, the government proposed a big rise in the level of insurance that oil companies would need to hold to ensure they cover the costs of an oil spill. The proposed rules raise the required insurance cover from the current $27 million to a maximum of $1.2 billion.
Now, while the increase is a significant improvement, Greenpeace senior campaigner Steve Abel said the new plan would still see taxpayers pick up most of the bill in the event of a major spill.
Abel said the announcement comes just before the giant drilling platform of Austrian oil major OMV is about to begin its work in New Zealand waters. OMV reportedly plans to drill at depths at least as great as those of the 2010 Deepwater Horizon disaster.
“The Deepwater Horizon oil drilling accident cost well over $90 billion, but the maximum insurance cover that the New Zealand Government is requiring of oil exploration companies is just $1.2 billion,” he said. “The rest of the cost of a spill inundating our coasts would be paid by our seabirds, dolphins, fisheries and the New Zealand public, which is a massive ecological and financial underwriting of oil exploration that we shouldn’t even be doing in this climate emergency.”
Abel believes oil companies should have to pay the full cost of anything going wrong. He claims the oil industry has refused to provide a guarantee that it will underwrite the cost of a spill and has refused to work here unless the government provides this subsidy.
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“The drilling is done by a locally incorporated subsidiary so if there is a big spill, the New Zealand subsidiary can simply declare bankruptcy and disappear over the deepwater horizon, leaving New Zealand to clean up their mess,” Abel added. “If companies like OMV believe their drilling is so safe, why don’t they underwrite the full cost of a spill?”
