KEY POINTS:
The world's biggest oil company, ExxonMobil, is to lead one of two consortiums committing up to $1.2 billion to explore the Great South Basin for oil and gas.
Associate Energy Minister Harry Duynhoven said yesterday the investment could generate "billions" in taxes and royalties for New Zealand if
oil was found.
The basin is considered one of the most expensive and risky frontier areas for exploration in the world and has not seen any offshore drilling rigs since the 1980s. Rigs will be at the mercy of southern gales and seas, and face drilling depths of up to 1.2km.
ExxonMobil's consortium includes New Zealand firm Todd Exploration. The second consortium will be led by Austrian oil company OMV.
The exploration programmes unveiled yesterday will determine within three years whether US$500,000-a-day oil rigs will be brought into the Southern Ocean off Southland.
The ExxonMobil consortium has secured two of the 40 Great South Basin blocks for exploration. The OMV group, which includes PTTEP Offshore Investment Co of Thailand and Mitsui Exploration of Japan, has six blocks covered by the five-year permits.
Duynhoven said the investment would almost double the offshore exploration around the country.
"There was competition [overlapping] for a couple of the blocks. Big companies don't chase small opportunities and we went for those with the best technical expertise and financial resources," Duynhoven said. Since bids opened last August on the 40 blocks covering 360,000sq km, five tenderers stepped forward, including up to three of the four oil giants.
Industry analysts were not surprised by ExxonMobil's successful bid, believing a key point for the petroleum giant's decision to tender was because it had earlier purchased Great South Basin seismic data, understood to be for $5 million.
Ownership of the data was disputed by Crown Minerals but eventually settled out of court.
Duynhoven confirmed that under the settlement the data would remain confidential to ExxonMobil for five years before being made public, saying "no one was disadvantaged".
ExxonMobil said it planned to begin its seismic programme this summer and make a drilling decision in about two years.
The OMV consortium is targeting a late-2008 start to its seismic studies, with both agreeing a single rig could be shared, if the timing was right.
Venture Southland strategic projects manager Steve Canny said ExxonMobil confirmed yesterday it had secured a seismic ship to work out of Bluff for two summers collating data on its total 18,000sq km of seabed.
He expected the OMV consortium would secure a ship late next year, noting its entire six blocks had 54,000sq km to potentially cover.
ExxonMobil's David Maughan said the company had been interested in the basin for the past five years. "It's a high-risk, high-reward area to be exploring," he said.
South Port chief executive Mark O'Connor, whose port is the obvious base for oil-related work, said it had "great surplus capacity" in spare land, berths and property to develop.
The lack of infrastructure in the South Island to process either gas or oil has been a sticking point for explorers in the past.
Duynhoven yesterday did not rule out the possibility of a private and Government joint venture to develop infrastructure but noted that overseas refineries were mainly private enterprise.
Greymouth Petroleum is still negotiating for some blocks in the Great South Basin and it is understood Shell remains interested in some areas.
The players
Two groups have been awarded permits to explore the Great South Basin:
Consortium 1: Led by the United States' ExxonMobil. Includes local company Todd Exploration. Access to 18,000sq km of seabed.
Consortium 2: Led by Austria's OMV. Includes Thailand's PTTEP Offshore Investment Co and Japan's Mitsui Exploration. Access to 54,000sq km of seabed.
- OTAGO DAILY TIMES
