Energy Minister Pete Hodgson today said the government had decided it did not agree with key elements of the tribunal's findings in its Petroleum Report, issued last May, and so would not be acting on its recommendations.

Petroleum Exploration Association of New Zealand executive director Mike Patrick was not available for comment, but it is known Kiwi energy executives will be relieved the government is not going to allow the tribunal to tamper with their industry, with the possibility of making it less attractive to overseas and local explorers and investors.

Hodgson also said the government rejection of the tribunal's findings and recommedations cleared the Crown to proceed with the sale of its 11% in the offshore Taranaki Kupe gas-condensate field to Genesis Power.

The government decided last April to sell its Kupe interest to facilitate the development of the field, said Hodgson. However, that sale process was suspended a month later to allow it to consider the tribunal's petroleum report which recommended the Crown's share in Kupe be available for inclusion in treaty settlements.

"That's a good decision, really good," Genesis Power chief executive Murray Jackson told EnergyReview.Net, adding that the decision should enable the sale process to be concluded quickly. "By clarifying the shareholding in Kupe, the Crown has enabled Genesis to progress the development of the oil and gas field."

Genesis is currently negotiating with companies, believed to still include Aussie explorers Santos and Origin Energy, for them to take a likely 40% stake in the offshore Taranaki field and also take over as operator of the licence, with the aim of developing the field by 2007.

Genesis, by buying the government's stake (a relic from a bygone petroleum regime where the Crown took an 11% exploration interest at no cost to itself), will take its total Kupe interest to 81%, leaving it with about 41% once it appoints an operator.

"Negotiations are progressing well and we expect to announce the successful company before Christmas," Jackson added.

The tribunal's report - on a claim by Taranaki's Nga Hapu o Nga Ruahine that oil and gas were taonga (treasures) - said the government should negotiate a royalties deal with affected Maori and not conclude the sale of its Kupe interest until the matter had been settled.

That prompted United Future leader Peter Dunne to accuse the tribunal of extremism and Todd Energy chief executive Richard Tweedie to say the tribunal's recommendations had the potential to be a "significant turn-off" for oil and gas explorers.

Today Hodgson said his officials did not consider the "treaty interest" argument to be persuasive and believed the government's policy and legislation regarding petroleum were a valid exercise of the Crown's treaty rights in 1937 and remained so.

He also noted the tribunal doubted that petroleum resources were taonga in terms of the treaty, and that it did not seek to develop the notion that Maori had development rights to petroleum.