Kupe start put off to 2008

The Kupe joint venture has delayed the start of production at the country's second-largest undeveloped oil and gas field because it is having difficulty securing contractors amid strong international competition.

Listed explorer New Zealand Oil and Gas said the Kupe partners expected to make a final investment decision during the first quarter of next year, with production now expected to begin in 2008.

The offshore Taranaki field had previously been slated to come on-stream in late 2007.

NZOG general manager Gordon Ward said the delay partly reflected tight international industry conditions. "The ability to get contractors on the exact times that we want them is not easy and, in particular, drilling rig contracts are hard to secure".

High oil prices have prompted a surge in activity in the oil-and-gas market around the world.

The Kupe project's estimated costs of $800 million are much higher than first expected.

The Kupe partners are NZOG (15 per cent), Genesis Power (31), Australia's Origin Energy (50) and Mitsui New Zealand (4).

- REUTERS