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Bill strengthens oil spill insurance obligations

20 June 2019

The Maritime Transport (Offshore Installations) Amendment Bill which has been introduced to Parliament has the objective of clarifying and strengthening the requirements on owners of offshore oil and gas installations to hold insurance or other financial security in relation to their liability for clean-up and compensation resulting from an oil spill.

The bill has been introduced by Associate Transport Minister Julie Anne Genter. It amends the Maritime Transport Act 1994.

The Act implements a polluter-pays regime, under which owners have unlimited liability for the cost of pollution damage resulting from a spill at their facilities in New Zealand waters. Anyone affected by oil damage from an offshore installation is entitled to make a claim against the owner. The owner’s liability includes the cost of measures to prevent or reduce pollution damage, the cost of reasonable measures to reinstate the environment, and the loss of profit from impairment of the environment. The bill does not change the owner’s liability.

The Act also provides for owners to hold insurance or other financial security in respect of their liability. The insurance or other financial security is intended to mitigate the financial risks to the Crown and other parties should the owner be unable to meet their liabilities in the event of a significant oil spill. Detailed requirements for the insurance or other financial security are specified in marine protection rules made under the Act.

The bill amends the Act to provide certainty in relation to the liability of insurers (or, in the case of financial security, the persons providing the financial security) to the Crown and to other third parties who are affected by the pollution. The bill also clarifies that rules may specify the types of liability that will need to be insured against and may provide for the insurance or other financial security to cover the cost of well control measures and other costs of implementing marine oil spill contingency plans.

The bill has a commencement date of 1 November 2019.

Last updated on the 16th September 2019