NZOG, Origin Energy walk away from Mangatoa prospect

New Zealand Oil & Gas and Origin Energy are walking away from the potentially huge Mangatoa prospect offshore of Taranaki.

The move comes days after the Ministry of Economic Development told the licence holders to either commit to drilling or leave.

NZOG and Origin Energy of Australia are joint owners of the PEP38478 permit which contains the Mangatoa prospect and have been looking for a partner to help finance the drilling of an exploration well for about a year.

NZOG said yesterday they had not been able to attract new partners and had relinquished the licence.

Mangatoa had huge potential for NZOG as the Maui field runs out of gas. Earlier this year, the company graded its estimates of gas reserves at Mangatoa to 3000 petajoules, nearly as big as the Maui field, from 2000PJ.

NZOG said while the potential of Mangatoa was attractive, this was offset by high development costs, with costs for drilling an initial well expected to exceed $20 million.

The company was not prepared to over-extend itself on a single prospect.

NZOG has several other oil and gas prospects under licence offshore of Taranaki, several of which are likely to be drilled in 2006.

Among these is the PEP38460 joint venture in the Tui oil fields. NZOG has lodged a petroleum mining permit to develop it.

- NZPA