Multinational oil and gas giant Shell and its New Zealand partner company, Todd Energy, have been caught drilling illegal offshore wells and escaped prosecution despite concerns from the government's environment watchdog, according to documents out Wednesday.

The opposition Green Party released the documents from the Environmental Protection Authority (EPA) that concluded that Shell Todd Oil Services (STOS) broke the law by drilling two wells without a marine consent off the west coast of the North Island.

The EPA inspected the Maui A and Maui B offshore installations in May and found two instances of STOS not complying with the Exclusive Economic Zone Act, which was passed in June last year, by drilling extension wells without a marine consent.

In a report, an EPA inspector wrote "The level of non- compliance highlights a need for greater regulatory oversight."

"The government's cavalier attitude towards environmental protection has encouraged this type of cowboy behavior by the oil industry," Green Party co-leader Russel Norman said in a statement.

"We now need the EPA to pursue prosecutions so that the industry learns its lessons. As the EPA says itself: 'There have been breaches of the Act. If there is no action taken in response to the non-compliance, it is likely that the non-compliance would continue'."

However, the company escaped with a warning letter and Environment Minister Nick Smith told television's 3News that the problems were caused by different interpretations over the Exclusive Economic Zone Act.

"It is inevitable with a brand new law, and we've never had regulation around the exclusive economic zone around these activities, that there's a bit of argy-bargy what is or is outside the law," said Smith.

3News quoted a statement from STOS that also attributed the problems to different interpretations of the new legislation.

The drilling had "no adverse impact on the environment," said the statement. Endi

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