Under the settlement, ExxonMobil has agreed to provide the Crown with a copy of the data on a confidential basis. The company has also agreed to offer the data to those awarded a GSB permit, on “reasonable commercial terms”.

If ExxonMobil is awarded a permit, the data is to remain confidential. But should ExxonMobil not be awarded a permit, then the Crown can disclose the data after five years.

The Crown cites the GSB as being “potentially very significant for New Zealand’s future energy needs”.

Crown Minerals group manager Adam Feeley is reported as saying that it was recognised that ExxonMobil and Fugro had acted in good faith throughout the process and he believed that the outcome was a good one for the three parties as well as “everyone else in the exploration industry”.

Feeley said the settlement preserved the Crown’s interest in obtaining a copy of all data acquired from exploration activities in New Zealand.

“After discussions with officials across the industry, and as a result of this settlement, I am in no doubt that there continues to be high levels of confidence in the fairness and transparency of the New Zealand allocation process,” he said.

But there seems to be good reason to doubt this.

Competitive markets work best where the markets are fully informed and asymmetry of information is removed. Where there is “insider” information, the insider clearly has a competitive advantage.

Furthermore, other potential bidders have to factor into their decision making what the cost of the ExxonMobil’s “reasonable commercial terms” for access to the data might be, and the transaction costs of obtaining resolution of those terms. Hence, the recent settlement might make it less attractive to other explorers to bid for GSB acreage.

The settlement might have been aimed at keeping ExxonMobil as a bidder, which some commentators said was in the Crown’s best interests. But what is the cost?

Feeley reportedly said Crown Minerals weighed up the possibility that allowing ExxonMobil to retain exclusive use of the data would deter other bidders, but was now satisfied that that’s not the case.

However, the settlement is contrary to the prerequisites of a competitive market.

Including as full information as possible is critical to ensuring the most efficient allocation of resources. Where this prerequisite is not met, there is always a cost.

Crown Minerals might have been better off being upfront and saying that it was satisfied that the benefit of keeping ExxonMobil outweighed the cost of some other bidders being deterred.

Bryan Gunderson is a specialist in energy and resource legislation at Kensington Swan