Petroleum regulator accused of industry capture

More than half the employees working in the government division tasked with regulating the petroleum industry have registered conflicts of interest. 

Information released to Newsroom under the Official Information Act raises concerns about a “revolving door” between the oil and gas sector and the part of the Government tasked to regulate it. 

Green Party energy spokesperson Gareth Hughes said the revelation shows the need for the “separation of state and oil”.

“The conflict of interest figures are incredibly high and concerning,” he said. 

Of the nine staff in the petroleum division at the Ministry of Business, Innovation and Employment (MBIE), five registered real or perceived conflicts of interest. The information does not record which companies or relationships caused those conflicts of interest, but conceded that it did employ people who had worked in the sector. 

How many is too many?

MBIE said that it was important to have people who had worked in the sector on staff.

“Industry experience and sector knowledge are a pre-requisite for a number of the roles in MBIE’s Petroleum Team, especially at the senior and principal level,” the Ministry said. 

It said their experience helped MBIE “execute its regulatory functions effectively”.

“For example, experience in petroleum geology, geophysics, petrophysics and reservoir engineering is needed to ensure companies are meeting the work programme obligations they agreed to with the Crown when permits and licenses were granted,” the ministry said. 

An MBIE spokesperson said the nature of the industry meant that people moved between industry and regulator depending on market forces. 

“When oil prices are high there is heightened activity and a corresponding high demand for staff with specialised industry experience,” they said.

While the information provided under the OIA said there was a demand for industry expertise at the senior level, the current and former managers of the division have not come from the sector. 

Neither Ilana Miller, the division’s manager who departed on Friday, nor her replacement Sarah Kenward, have worked mainly in the public sector. 

Green Party Energy spokesperson Gareth Hughes says the "revolving door between MBIE and big oil must stop". Photo: Lynn Grieveson

Hughes is concerned the Ministry has become captured by the industry that it is designed to regulate. 

“For too long there has been a close and cosy relationship between governments and the fossil fuel industry that’s seen significant taxpayer support given to the very product risking our future," Hughes said.

“The revolving door between MBIE and big oil must stop.”

Concerns of industry capture are common across the public service, which must balance a desire for expertise against concerns about growing too cosy with regulated industries. 

Staff at MBIE are required to declare any actual or potential conflicts of interest. From that point the employee and their manager work to “manage” the conflict. 

A bruised history 

MBIE’s petroleum division faced allegations of bias last year when the Government announced it would stop issuing new offshore oil and gas exploration permits. 

Advice from MBIE ahead of the ban cautioned that “a ban on all future offshore petroleum exploration to run counter to a number of important public policy objectives” and could cost the Government $7.9 billion in lost revenue. 

Energy Minister Megan Woods disagreed with that advice at the time, saying it was based on GNS reports which cautioned it was difficult to quantify oil and gas reserves that had yet to been discovered. 

Last year, Greenpeace went further, labelling MBIE the “Ministry of Oil”.

"They're essentially operating as the 'enemy within' by working with the oil industry to stop progress on climate change," said executive director and former Green co-leader Russel Norman.

He said that the advice provided to Woods “could have been written by the oil industry”.

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