“The government's ill-advised plan to force the industry to increase oil storage, to create a 90-day oil security buffer, completely ignores the existing underground reserves and opportunities for further discoveries,” says Peanz executive officer Mike Patrick.

He questioned whether it was fair the government expected industry to provide the additional required 500,000 tonnes of capacity at its own expense. “Is this realistic?”

Energy Minister Pete Hodgson last week released an Economic Development Ministry report that found New Zealand needed approximately 500,000 tonnes of additional storage to fully comply with International Energy Agency standards.

New Zealand's self-sufficiency in indigenous oil had deteriorated dramatically in recent years - from around 50% to the present 20%.

“But with the right incentives, potential new developments such as Maari and Tui-Amokura-Pateke could more readily and swiftly be brought into production, creating substantial quantities of crude and condensate to make up the supposed shortfall identified by government,” Patrick said.

He argued the government had been poorly advised regarding the definition of “new discovery” for its recently relaxed gas royalty regime.

“Several developments which would assist this country in terms of oil and gas supply security will not qualify, and hence may not be developed," he said.

“If government were to realise that this attempt to define discovery is too restrictive, were to redefine it and introduce royalty relief for oil, that would truly create an incentive for exploration.

“They would not only see an immediate increase in exploration for oil and gas, and ensuing increasing production, but also at a fraction of the cost of installing additional storage."

Patrick argued the only barriers to getting the oil out of the ground were financial ones, in the form of royalties.

“How about a policy that will most likely find new oil, not just the gas reserves the government is currently seeking, a policy that will create useful jobs, reduce the use of overseas funds and save the consumer the costs of establishing the oil security buffer?” he asked.