NZOG to Invest $147 Million in the Kupe Development

Tony Radford, executive chairman of NZOG, says in the report that his company would contribute NZ$147 million to the total Kupe gas project development costs of NZ$980 million.

The Kupe final investment decision announced last month included a substantial allowance for contingencies such as weather downtime during drilling of production wells.

Mr Radford says NZOG is presently negotiating bank project funding for the bulk of this investment, which will be outlaid over approximately two and half years. Genesis Energy, which has contracted to purchase the gas under a long-term contract, will also provide NZOG with up to NZ$20m funding support.

Construction works for the Kupe field should be under way by September 2006 and development drilling of three Kupe wells is currently scheduled for the first half of 2007.

Kupe production is expected to commence no later than the first half of 2009, delivering around 20 petajoules a year of sales gas – approximately 15% of New Zealand's current annual demand plus an initial 1.7 million barrels a year of condensate and 761,000 barrels a year out of LPG.