The New Zealand Government has announced a new proposal to better protect taxpayers from the cost of potential oil spills.
Under proposed new rules, offshore oil and gas operators would be required to insure up to NZ$1.2bn ($791m) in order to help cover the fallout of an oil spill. New Zealand Associate Transport Minister Julie Anne Genter announced that the Cabinet had agreed to consult on increasing the amount of cover oil and gas operators are required to hold.
At present, operators are required to insure for about NZ$27m ($18.3m), but the new proposal would see them pay more based on their risk, up to a maximum level of $791m. Citing the example of the Rena oil spill, Genter said communities and taxpayers should not be left to foot the bill for clean-up of an oil spill.
Genter said: “It’s only fair that operators are able to cover the clean-up cost of a worst-case scenario oil spill.
“While the likelihood of an oil spill is low, if one occurs it could have significant environmental, financial and cultural impacts and cost tens or even hundreds of millions to clean-up.”
As per the proposed regime, operators must hold insurance proportionate to the risk posed by their installation poses.
Genter said: “The proposed upper limit has been set at $1.2 billion to future-proof the regime in the event that a future installation proceeds in a higher-risk, deep water location.
“For existing operators, the amount of financial insurance required would be well below the upper limit of $1.2 billion.”
As part of the proposed regime, the Minister has also introduced a bill to amend the Maritime Transport Act 1994. This amendment would provide certainty in relation to the liability of insurers, or in the case of financial security, the persons providing the financial security, to the Crown and to other third parties affected by the pollution.