PERTH - Seven oil and gas players are racing to secure offshore exploration rights in New Zealand ahead of a national election that could lead to a ban on new permits, as the country's major parties battle over the need for gas.

New Zealand attracted the interest after the conservative government last year overturned a ban on new offshore drilling imposed in 2018, seeking to avert gas shortages for industrial users and bolster power generation in dry years when hydropower output falls.

The country produced 7.6 petajoules (PJ) of gas in May, largely from fields that are declining or will be soon. Gas reserves fell 23% to 731 PJ in 2025 from a year earlier, the government said in January.

All the gas produced is used domestically, and an industry group, Energy Resources Aotearoa (ERA), estimates that if more gas were available, there would be demand for an additional 100 PJ a year.

The prohibition on offshore bids imposed by former Prime Minister Jacinda Ardern's government deterred investment, as did long waits for environmental approvals, according to the industry and government.

Majors Chevron and Equinor gave up their exploration permits after the offshore ban took effect.

"We've kind of become jammed at one end. We've got old, mature, and near end-of-life fields at one end," said ERA CEO John Carnegie.

"Because of the ban, we've got a seven-year gap. We're effectively rebuilding the sector from scratch," he said.

Last year, New Zealand established a NZ$200-million ($117-million) fund to help operators develop projects, including extracting additional gas from mature reservoirs. However, so far no new permits have been issued.

PROMISING FIND

UK-based Sunda Energy and Australia's Pancontinental Energy, as well as privately-owned EnZed have secured grants and are awaiting formal permits.

Three New Zealand companies have teamed up to secure another permit in the area, while CBX Energy is working to secure a permit in the Canterbury Basin offshore the South Island.

Competitors have three months to offer superior work plans for the same areas.

Both Sunda and EnZed are targeting areas with extensive subsurface data and known gas discoveries in the Taranaki Basin off the west coast of the North Island, the country's only producing offshore basin.

"We think it's an interesting discovery and we'd like to work with it," Sunda CEO Andy Butler said.

The country is attractive to smaller explorers at a time when gas policy in neighbouring Australia has sown consternation and confusion in the industry.

"I think probably Australia's domestic gas mess means that capital allocators are looking at New Zealand as a potential alternative," EnZed founder Neil Young told Reuters.

Resources Minister Shane Jones said investor interest showed confidence was returning.

"It's taken us a while to straighten out the regulatory environment and, more recently, people have shown they're willing to risk money and have a go," he told Reuters.

The explorers want to secure drilling rights ahead of New Zealand's election in November as the opposition Labour party intends to reimpose a ban on offshore exploration while honouring existing permits.

"Labour will reinstate the ban on new oil and gas permits because it’s the right thing for New Zealand’s energy security and for bringing down power bills over the long term," said acting Labour Energy and Resources spokesperson Tangi Utikere.

"For existing permits, we have said that we would honour them, but we don’t believe the government should be propping up an outdated industry," he told Reuters.

Polls currently show the election race is too close to call.