Its one of the proposals housed in a new policy plan which outlines how the sector can deliver major economic, environmental and social benefits for New Zealanders.
Petroleum Exploration and Production Association of NZ (PEPANZ) CEO Cameron Madgwick said allowing new exploration permits could earn tens of billions in revenue for New Zealand and help the world lower emissions by displacing coal.
In April of last year the government announced an end to new exploration permits beyond onshore Taranaki.
Mr Madgwick said since then the NZ Institute of Economic Research had modelled the economic cost of the decision at $28billion, with "minimal'' impact on emissions.
Conversely, official advice from the Ministry of Business, Innovation and Employment (MBIE) had stated that the move was more likely to increase emissions.
"The Interim Climate Change Committee has recommended against a target of 100% renewable electricity because of the cost of replacing natural gas, which in turn is counter-productive for lowering emissions by raising the price of electricity.''
He said that natural gas continued to have a major role to play in lowering emissions, by replacing higher emitting energy sources like coal, keeping electricity prices down and producing hydrogen at lowest cost.
"This is a major reason why global demand for natural gas is on the rise, with a 45% increase expected by 2040.''
He said the industry supported a comprehensive, globally connected ETS as the Government's main policy tool for reducing emissions.
"However, it should be comprehensive and apply to all gases and all sectors, including agriculture and methane.''
He added that legislation should also be updated to specifically allow carbon capture and storage technology to be used in New Zealand.
"This will be a crucial technology to help the world lower emissions and it should be supported in New Zealand.''