Frontier Petroleum Basins Represent NZ's Exploration Future

The Associate Minister of Energy, Harry Duynhoven, described the arrival of the Ocean Patriot drilling rig as a major vote of confidence in New Zealand's frontier petroleum basins by international explorers.

Speaking from a site visit to the offshore rig currently anchored in Hawke Bay, Mr. Duynhoven said, "The potential of the East Coast Basin has been long-recognized by the exploration industry. However, it is only now through changing market conditions that explorers are beginning to show real interest in this and other basins outside Taranaki."

The Minister said that the operators, Tap (New Zealand) Pty Ltd, along with their joint venture partners Westech Energy, were to be congratulated for their aggressive venture into the under-developed East Coast region.

There has only been one offshore Wairarapa well, Titihaoa-1, which was drilled in 1994.

"With oil prices exceeding US$40/barrel and the New Zealand gas market becoming increasingly attractive to explorers, the future of these frontier basins is looking better than at any time in our history" Mr. Duynhoven said.

"While the financial risks in these areas may be greater, the potential financial rewards for explorers, and the rewards to New Zealand in terms of energy security, are equally high."

The Minister added that the initiatives announced by Cabinet in May this year were proving effective in improving international interest in New Zealand, with more announcements to come.

Last month the Government announced that the '183-day rule', which requires non-residents from some countries with which New Zealand has a double tax agreement to leave the country within 183 days if they want to remain tax-exempt on their New Zealand-sourced income, will be waived until late 2009 for non-resident, offshore rig operating companies.

A proposed work program for the acquisition of seismic data to improve knowledge about New Zealand's petroleum basins will also be considered by Cabinet shortly.

"All in all, we are moving to create a very positive case for exploration here," said Mr Duynhoven "and we are confident that we can attract further international investment from overseas exploration companies in the coming year."