Mineral rights in New Zealand belong to the Crown and are made accessible through a permitting system that awards large exploration blocks, generally for five years and sometimes up to 10 years, in exchange for work commitments. The blocks are either made available by the government through “block offers” for competitive bidding, or are granted in response to applications for particular lands made by interested parties. Once a permit is granted, the permit-holder has exclusive rights to explore and develop the block while fulfilling the work commitments. Surface access is negotiated with landowners within a 1-km radius of the exploration site.
The fiscal regime governing energy production is favourable, comparable to the best current regimes in western Canada. Oil and natural gas production is subject to a 5% royalty until recovery of capital costs, followed by a 20% net accounting profits royalty. Energy companies are also subject to 28% corporate income tax, with tax treatments in place to avoid double taxation. Unlike many international settings, New Zealand has no “back-in” clauses to impose unearned working interests or production-sharing requirements on domestic or foreign energy companies.