The Government says it would support a Canadian oil company's plan to start drilling on the East Coast, as long as it is done safely.
In a corporate statement, TAG Oil has advised investors that aggressive expansion is planned on the East Coast, which it says has the potential to produce billions of barrels of oil.
The company says it has already increased oil production in Taranaki, from less than 300 barrels per day to more than 4500 bpd last year.
The company has exploration rights to more than 1 million acres of land in the East Coast and Taranaki, where it already has two functioning oil wells.
Energy Minister Phil Heatley says TAG Oil would have to get permits to do the drilling, and their operations would be monitored closely.
He says New Zealand is resource rich, but the environment and tourism are also important to the country.
"So it's simply a balancing act there and this Government will be promoting more exploration and more benefits from our resources, but at the same time balancing our environmental responsibilities," he says.
But the Green Party says an oil boom is not what New Zealand needs.
Green Party oil exploration spokesperson Gareth Hughes says it would be better for New Zealand to focus on renewable energy and green technologies.
Mr Hughes says oil is a capital intensive industry which would see profit go overseas without providing many jobs here.