The pan-industry group includes the Petroleum Exploration and Production Association of New Zealand (Pepanz), Business New Zealand, Federated Farmers, New Zealand Chambers of Commerce, Greenhouse Coalition, Major Energy Users’ Group and the Business Roundtable. Yesterday it wrote to Finance Minister Michael Cullen, State-owned Enterprises Minister Trevor Mallard, and Energy Minister David Parker outlining its concerns about the proposed 10-year ban.

Pepanz executive officer John Pfahlert said all indications were that the Government had moved in a manner outside legislated legal procedures.

Changes to the commercial operations of a state-owned enterprise must be made through a change to their Statement of Corporate Intent under well-established procedures laid down by Parliament, not by sending them a letter of instruction, according to Pfahlert.

“Governments are required to operate within the law,” he said.

“It is not a good look for New Zealand that the many overseas companies that are involved in our industry, and spend tens of millions of dollars in our economy, find they are operating in a country with a government that ignores the law at its convenience.”

He also argued that the new policy put the security of New Zealand’s energy generation at risk.

“Oil and gas exploration is vital to the future economic course of the country,” Pfahlert said.

The group’s letter said New Zealand should be aspiring to match better-performing countries’ GDP growth rates and any policy that might be a barrier to that goal, such as limiting new baseload fossil fuel generation, should be discounted.

“Less tangible, but nevertheless important, will be the chilling effect the proposal will have on petroleum exploration investment in New Zealand,” the letter said.

“If this proposal proceeds New Zealand will be the only country in the OECD and probably the world to limit new baseload thermal generation.

“The international capital market may view the proposal as a significant unpredicted and unjustified intervention and hence will increase our sovereign risk. The adverse effect on attracting investment is likely to be wider than just the petroleum industry.”

Genesis Energy had been planning to seek consents for a baseload gas-fired power station at Rodney, north of Auckland. The letter argued this proposed project was an excellent option for the future and should be allowed to continue.

The ban placed even the assumed modest rate of new gas discoveries needed to meet current gas-fired generation at risk, according to the group’s letter.

However, explorer New Zealand Oil & gas said earlier this week it believed the ban would not hurt local exploration, but would discourage proposed liquefied natural gas import developments, which could threaten exploration in New Zealand.