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Company allowed to obtain majority ownership of zombie PEL without full government scrutiny

Documents obtained recently under Government Information Public Access (GIPA) laws reveal the NSW Government was unable to complete a full and transparent investigation into whether it was appropriate for a private multinational company to purchase majority ownership of an expired petroleum license in the Upper Hunter, but the sale went ahead anyway.

GIPA documents are available here and here.

The holder of the zombie license has since applied to resurrect it from the dead, confirming farmers' fears that the Santos Narrabri gasfield was a "Trojan Horse" for the dozen surrounding petroleum licenses which had expired, but were not formally extinguished.

In 2016, Hunter Gas sold 80 percent of its 85 percent stake in PEL 456 to Hong Kong and London based oil-focused private equity fund Kerogen Investments - a company that has links to the Israel-Cyprus gas pipeline and is a major investor in north sea oil/gas companies. 

However, it appears the Department of Planning was able to find little information about Kerogen Investments beyond what was on the company’s website.

In a briefing note from the department to then Resources Minister Don Harwin, the department states: “KI is a private foreign entity and so publicly available information about the company is limited.

When considering whether KI was a ‘Fit and Proper Person’, a requirement under NSW mining law, the department’s correspondence to the then minister stated, “Due to the risk profile of the application and the adequacy of the information available, personal and company probity forms were not served to any of the relevant directors. As such, the research undertaken on the applicant companies cannot be considered completely exhaustive…” 

Similarly, research conducted by the NSW EPA failed to uncover relevant information about KI, with the authority stating, There is no compliance history under the company name of Kerogen Investments No. 1 (HK) Limited. Further searches of our licensing, case management and electronic document management systems do not show any records for Kerogen Investments No. 1 (HK) Limited. 

Lock the Gate Alliance is not suggesting Kerogen Investments is in any way unfit to hold the PEL. 

The issue of expired, but not extinguished PELs across the north west of NSW has become a hot topic of late due to two companies - Comet Ridge and Carbon Minerals - recently indicating they are preparing to recommence exploration work on their respective licences, which they hold jointly with Santos. 

Farmers in the region have long feared the recently approved Santos Narrabri gasfield would be a Trojan Horse for gas companies looking to exploit the dozen zombie petroleum licences across the north west.

Mullaley farmer Margaret Fleck, whose property is covered by a different zombie PEL, said the NSW Government’s decision to rubber stamp the transfer of majority ownership of a PEL without all the necessary information to make an informed decision did not pass the pub test.

“The people of NSW need to have faith that their government is at the very least properly scrutinising companies that want to engage in an industry as controversial and risk prone as coal seam gas,” she said.

“Even if Kerogen does not have boots on the ground, it still became the majority owner of a PEL that covers a large swathe of the Upper Hunter.

“These zombie licences are now hovering like a bad smell over the north west, and preventing members of the public from making long term decisions at their properties due to the uncertainty that surrounds them. 

“It is shameful that the NSW Government has allowed a company to obtain majority ownership of a zombie PEL without the basic checks and balances completed. What is the point of having ‘fit and proper person’ laws if they can be ignored if the department decides it’s too hard to find the relevant information about a company?”

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