NZOG to look offshore for new oil opportunities, no ímmediate impact on existing NZ operations

Thursday 12th April 2018

New Zealand's only NZX-listed oil and gas explorer and producer says today's government announcements ending the issuance of offshore oil and gas exploration permits "will not have any immediate material impact" on its operations or earnings, but it will now start looking offshore for new opportunities.

"Potentially transformational New Zealand Oil & Gas exploration prospects in the Canterbury and the Great South Basins are unaffected by today’s announcement and the company is continuing to market these world-class prospects," NZOG's chief executive, Andrew Jeffries said in a statement.

NZOG shares fell 3.2 percent to 60 cents.

The company would "manage the risks associated with the government's policy change by investing in exploration and production assets in other jurisdictions".

NZOG is the permit-holder for the Barque exploration prospect, off the Canterbury coast, which Energy Minister Megan Woods said today held potentially "trillions of cubic metres of gas" which could still be exploited if NZOG made a discovery there.

"We are focusing on assets where our New Zealand capability can add value, with a preference for gas assets because gas is seen in most jurisdictions as a vital energy source for the

transition to a lower carbon world," said Jeffries, who described today's announcements as a "sudden change of policy" on which there had been no formal consultation with the industry.

The Labour Party campaigned before the 2017 election on a low-carbon future, 100 percent renewable electricity production by 2035 and a net zero carbon emissions economy by 2050 but the first suggestion it might end the six year-old practice of annually offering blocks of exploration territory to local and international oil industry players was on March 19, when Prime Minister Jacinda Ardern broke from her schedule to accept a Greenpeace petition calling for an end to oil and gas exploration.

Today's announcement ends only the offers for offshore exploration permits, with onshore Taranaki permits still to be offered for another three years, before that practice also is reviewed. Existing exploration and mining permits are unaffected by an announcement the government says is the first step in a 30-year "just transition" away from fossil fuels.

Jeffries said that while renewable sources of electricity could supply most of New Zealand's electricity needs in a year of normal rainfall, "another two-thirds of our national energy use is industrial and transport related, for which complete renewable alternatives are not currently economically viable".

"Therefore the choice for New Zealand is whether we use our own resources for our own benefit, or New Zealanders rely on overseas energy sources benefitting those economies."

(BusinessDesk)

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