Oil giant's exit deals blow to NZ hopes

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Oil exploration off New Zealand has been dealt a blow by ExxonMobil's decision to abandon its Great South Basin prospect.

The company held 90 per cent of a permit off the Southland coast; New Zealand's Todd Energy held the rest.

The partners are estimated to have spent tens of millions of dollars assessing mainly gas prospects in one of the harshest deepwater prospects in the world.

Energy and Resources Minister Gerry Brownlee said he was disappointed but, given ExxonMobil's other opportunities around the world, it was not a surprise. It was not a total loss to the basin, which still had potential.

Two other operations are exploring the area and any future exploration of the ExxonMobil/Todd area will be helped by the data they have collected which, under the terms of the permit, will now be passed to Crown Minerals.

An ExxonMobil spokesman said the permit had been surrendered "reluctantly" after a risk and reward assessment had found it did not measure up and after it failed to find another large investor.

Consistently near the top of the list of the world's biggest companies, ExxonMobil was seen as a star player in the New Zealand oil scene and the last Government claimed $1.2 billion would be spent on exploring the basin.

ExxonMobil and Todd were last year granted a 12-month extension to seek interest from potential partners to spread the cost of drilling in the high-risk basin, known in the industry as billionaires' country.

Exploratory drilling would push costs into the hundreds of millions of dollars and developing a field would run into the billions, one source said.

The ExxonMobil spokesman said he did not have figures on what the company had spent.

"We've worked this prospect very hard over the last three years in terms of analysing data and acquiring seismic information. We were not able to attract any other participants so reluctantly we've decided to surrender the permit."

ExxonMobil's interests include gas and oil off West Australia, Bass Strait, the Philippines and Malaysia but the company has not ruled out returning to this country.

'We look at opportunities all around the world on an ongoing basis and New Zealand opportunities will be considered along with everything else."

The chief executive of the Petroleum Exploration and Production Association, John Pfahlert, said the continued presence of ExxonMobil would have boosted the industry here.

"It's perhaps disappointing that they pulled out because they are a large global player who would have brought in a lot of expertise."

Highly complicated geology was a feature of most New Zealand petroleum basins.

"It's a bit disappointing for the locals, who were hoping something big was going to happen down there, but there are a couple of other outfits looking."

One is led by Austrian company OMV, with a permit three times the size of ExxonMobil/Todd, and acreage held by private New Zealand company Greymouth Petroleum. Both companies were reasonably upbeat about prospects at a petroleum conference in Auckland last month.

OMV must next year make a call on whether to drill.

Crown Minerals group manager Chris Kilby said a decision would be made early next year on whether to re-offer the surrendered permit and an extensive area not taken up during the last block offer in 2007.

Great promise

* The 500,000sq km Great South Basin is one of the nation's largest.

* Subcommercial gas-condensate was discovered in one well in the late 1970s.

* Hydrocarbon shows in three other wells.