How oil companies made you pay $300m to clean up their oil field mess (and how they are trying to do it again)

From 2021 to 2025 New Zealand taxpayers were forced to pay $300m to decommission the Tui oil field off the coast of Taranaki, after the company operating it went bankrupt in 2019. 

The companies that made all the profits from the Tui oil field used a loophole in the law to pay nothing towards the cost of decommissioning. 

It was an expensive lesson for the Ardern-led Government which changed the law in 2021 to close the loophole. In the future the oil companies that made the profits from an oil field would be automatically liable to pay for the clean up once the field was exhausted – this was called ‘trailing liability’.

Incredibly in 2024 the Luxon led Government re-opened this loophole after lobbying from the oil industry, exposing taxpayers to billions of dollars of potential costs to clean up the many end-of-life oil and gas fields sitting off the New Zealand coast. 

Disturbingly some of the oil industry executives and companies who sat in the room with the Minister and officials, lobbying to re-open the liability loophole, were the very same individuals and companies who were directly involved passing the $300m Tui oil field decommissioning cost onto taxpayers. 

This is a story about how the heavily subsidised fossil fuel industry is not only passing on the cost of climate catastrophe to ordinary people, but is also passing on the cost of cleaning up their oil field mess once they’ve made their profits. 

And it is a story of Ministers and a Government that is so wedded to fossil fuels that they are willing to lumber New Zealand taxpayers with billion dollar clean up bills to try to keep New Zealand hooked on an expensive and polluting energy source, rather than embrace clean energy. 

The Tui Oil Field Story

From 2007 until 2017 the Tui field produced oil, and hundreds of millions of dollars of profits, for its owners – the NZ Oil and Gas company and Australian Worldwide Enterprises. In 2017 ownership was transferred to a small private equity company Tamarind Taranaki Ltd, a subsidiary of Tamarind Resources, a Malaysian based company. Tamarind operated the field until 2019 when it declared bankruptcy. 

The transaction to pass ownership of the Tui field from NZOG and its partners to Tamarind was unusual. NZOG and its partners received about US$750,000 from Tamarind, but in return Tamarind received $4m in oil and about $6m in working capital. 

And the reason they paid Tamarind to take on the field was because Tamarind also took on the liability for decommissioning the field. As the CEO of NZOG said at the time, the transaction would “minimise financial risks associated with the abandonment of the facility.”

In effect NZOG and its partners paid Tamarind around $10m to take on the decommissioning liability, which would turn out to be around $300m. A profitable deal with NZOG and AWE, but a terrible deal for the taxpayer.

Tamarind didn’t have enough money and didn’t last long. After declaring bankruptcy in 2019 Tamarind had insufficient funds to pay for the essential decommissioning, and hence the NZ Government paid for and managed the decommissioning from 2021 to 2025.

The decommissioning was essential to ensure that the wells were safely plugged, the decaying oil production ship was safely demobilised, and all the oil contaminated subsea equipment and piping was removed. 

NZ Oil and Gas and its partners made massive profits from the Tui field but made no contribution to the cost of its decommissioning.

Closing the Loophole – Trailing Liability

This transfer of decommissioning liability used a legal loophole and hence in 2021 the New Zealand Parliament changed the law to introduce the concept of ‘trailing liability’. This meant that the oil companies that operated and made profits from an oil field would have the ultimate liability for decommissioning the field at the end of its life. Even if they ‘sold’ the field to another company which then went bankrupt, the liability for decommissioning would return to the original operator – they would trail the liability behind them whether they liked it or not. 

As you can imagine, oil companies did not like the concept of ‘trailing liability’. This was especially as New Zealand has a number of oil and gas fields that are nearing the end of their lives, fields much bigger than the Tui field with decommissioning costs much higher than Tui. 

The first impact of closing the loophole was that the attempted sale of the Maari oil field, by oil giant OMV to minnow Jadestone, was effectively stopped by the new trailing liability law – the decommissioning costs would be significantly greater than Tui.

It was in the oil industry’s financial interests to find a way to pass the huge decommissioning costs, these ‘trailing liabilities’, onto the taxpayer. But why would NZ taxpayers agree to such a huge subsidy after the experience with the Tui field? What kind of a sucker would agree to such a demand?

And then, after the 2023 election, along came new Prime Minister Christopher Luxon, Finance Minister Nicola Willis and Minister for Resources Shane Jones… and the industry’s eyes lit up.

One’s born every minute

Luxon, Willis and Jones had stated that the 2018 law banning new offshore oil and gas exploration permits was the cause of New Zealand’s energy woes, and they were committed to getting oil and gas exploration restarted. 

The reality however was very different. Even oil industry experts believed that the exploration ban had nothing much to do with causing the current energy troubles. This is because there had been no discoveries of major new fields over the last 20 years of exploration, and hence it was unlikely that there would be any since 2018. And in addition it takes more than a decade between issuing permits and any potential fossil fuel production. Moreover, very few believed that it was possible to get significant offshore oil and gas exploration restarted given the long history of failed exploration, civil society opposition, and regulatory uncertainty.

So the oil and gas industry were under no illusions that New Zealand was entering a new golden era of exploration. But if the incoming Government wanted to believe otherwise then the industry finally saw how they could get rid of the wretched trailing liability law. They told the gullible new Ministers that in order to open the doors to the new vista of oil and gas exploration the Government needed to remove the blockage of the trailing liability.

There followed a series of meetings in 2024 and 2025 between oil industry executives and Ministers and officials in which the oil industry laid out their demands, and surprise surprise a key demand was the overturning of the trailing liability.

Luxon, Willis and Jones had told the public a fairy story about oil exploration which was hard to wind back. But if the industry was to publicly go along with the fairy story then the industry needed something in return – overturning trailing liability.

It’s the same faces

The really remarkable thing about this story is that the very same executives who had been directly involved in passing the liability for Tui decommissioning to Tamarind, and subsequently the Government, were now trying to convince Jones to reopen the loophole they had used, which had cost taxpayers $300m. 

Any self respecting representative of the people, looking at executives that had cost the country so much cash, would never have let them into the Beehive. But not Jones. 

He met with Andrew Jeffries from NZ Oil and Gas in 2024. Jeffries had been CEO at NZOG when they paid Tamarind to take on the liability of the decommissioning of the Tui field. Another staff member from NZOG from that period was also present.

Jones also met with Wai-Lid Wong, now at Matahio Energy, who had been CEO of Tamarind Resources when it acquired the Tui field via a subsidiary. Again another former staff of Tamarind from that period was present.

Thus some of the key people, who had key roles in costing New Zealand taxpayers $300m, were back in the room arguing to undo the trailing liability provisions that the New Zealand Parliament had introduced in response to their actions. It should have set off alarm bells, but not for Jones.

In addition Jones met with the oil industry lobby group, Energy Resources Aotearoa, at least on seven different occasions over this period.

The billion dollar loophole returns

The end result of oil industry lobbying efforts was that the law was changed to remove automatic trailing liabilities. Under the new 2025 law the Minister for Resources in combination with the Minister for Finance has discretion to waive the trailing liability provisions when ownership of an oil field passed from one company to the next. 

The Minister for Resources is Shane Jones, who has spoken openly about being an advocate of fossil fuel companies, and he has repeated the Trump line of ‘drill baby drill’. His ethical compass  was made plain when he was caught unlawfully using his government credit card to buy hotel pornography (he paid it back when it became public).

The Minister of Finance is Nicola Willis who has strongly supported oil companies exploration efforts and wrote to electricity companies to offer government financial support for more fossil gas generation. Her father, James Willis, was a key player in the oil and gas industry. He was a partner at Bell Gully law firm, specialising in oil and gas. Bell Gully acted for NZ Oil and Gas. After leaving Bell Gully he was a director of Octanex, which had a partnership with NZ Oil and Gas. 

It seems unlikely that these two ministers are going to resist oil companies’ demands to be released of their decommissioning liabilities. The result would leave taxpayers with billions of dollars of decommissioning costs.

Hamstringing the clean energy transition

New Zealand will not see a new wave of oil and gas exploration, for all the reasons outlined above. Since the exploration ban was removed there has been interest from a single small shell company from Australia, which is unlikely to lead to much.

New Zealand’s future is in renewable energy, energy storage, demand side management, and electrification of transport and industrial processes. These energy sources are climate friendly, cheaper and more reliable.

But as we make this transition, the last thing we need is being forced to pay out billions in subsidies to oil companies to cover the cost of decommissioning their exhausted oil and gas fields.

The current New Zealand Government regime, with its focus on subsidising fossil fuels and helping their donors, won’t stop the clean energy revolution but they can slow us down and waste billions on oil companies that should be spent on the clean energy transition. We don’t have the time or the money to waste on their fossil fuel cronies.