Tui oil decision eagerly awaited

New Zealand Oil and Gas shareholders are standing by for a final investment decision on the Tui oil field, discovered two years ago.

NZOG said it hoped to make a decision by the end of October on developing the offshore Taranaki field, with the cost expected to be as high as $323 million.

The decision is likely to prove a talking point at the company's annual shareholders' meeting, held in Auckland next Friday.

An engineering study has already shown it is economically attractive to develop the area, with a floating storage and offloading ship used to pump oil from beneath the seafloor. The ship would then store the oil and discharge it into visiting tankers.

Developing Tui is expected to cost between $287 million and $323 million.

NZOG said the Tui project was likely to be New Zealand's first offshore development solely targeting oil.

The joint venture partners already have a contract to get a drilling rig, which is expected to take between four and six months to drill production wells late next year.

NZOG has a 12.5 per cent stake in the field, discovered when exploratory wells were drilled in 2003 and 2004. A subsidiary of US oil company Transworld owns 45 per cent of Tui and is the field operator.

NZOG's share price has recently risen to more than $1, though it hit a high of $1.28 in February.

Despite declining since then, the price is still well above the 36c level it was trading at in January last year.

In July this year the company successfully raised $42.5 million in working capital as investors cashed in their listed options to buy shares.

But NZOG shareholders will have money in more than just oil and gas, with many no doubt hoping that soaring world coal prices will continue.

Last month NZOG finalised details of its Pike River float, announcing it was joining with an Indian coal company, Saurashtra Fuels Private, to fund development of its mine on the South Island's West Coast.

Some time before March, Pike River will offer $30 million in shares to the public.

"A significant portion" of these shares will be reserved for NZOG shareholders.

Pike River will be the only listed coal company in New Zealand. Most of the country's coal is mined by Solid Energy, a state-owned enterprise.