Norwegian oil giant pulls out of Northland

Farewell to Northland as Norwegian oil company Statoil now shifts its focus to the east coast. Picture / NIWA

Norwegian oil giant Statoil has struck out in the Reinga Basin and pulled the pin on exploration, denting the government's resources strategy.

When put up for tender in 2010, the area was described by government agency, GNS Sciences as one of the most prospective frontier basins in New Zealand.

Statoil said strong opposition from some iwi and environmental groups to its programme off Northland's west coast had not played a part in its decision to surrender the permit.

"Some may speculate we are surrendering the permits for various reasons but the only reason is that we see the probability too low to justify continuing our search, " said Statoil New Zealand country manager Brynjulv Klove.

One of the company's top executives, Pal Haremo, vice president of exploration travelled from Oslo this week to meet local groups and talk to the government about the decision to quit the area.

Statoil however retains a 50 per cent interest in an area off the southern east coast of the North Island.

It shares that permit with Chevron and Haremo said seismic work could begin this summer.

"I'm disappointed but this is part of the exploration game. We now change our focus to the east coast," he said.

Norwegian government-owned Statoil is in the top 10 oil producers with its economic base on that country's continental shelf. It also has operations in more than 30 nations overseas.

Haremo said in frontier areas such as the Reinga Basin there was a 1 per cent to 10 per cent chance of finding oil.

While the company had not moved to the drilling stage, it had spent "a lot of money" gathering and analysing 5000sq km of seismic data.

Statoil's decision comes after troubled Brazilian company Petrobras in 2012 pulled out of exploration in the Raukumara Basin off the East Coast and in 2014 Texan oil giant Anadarko came up dry off Taranaki following a $300 million drilling campaign.

Statoil's permit areas:

In Northland, Statoil faced anger at public meetings two years ago as it explained its plans. Environmental groups were worried about the risk of an oil spill in water up to 2000m deep and the impact on the environment of burning fossil fuels.

Haremo said opposition from a range of groups - as well as support from others - was likely off the east coast as well.

"The opposition [in Northland] had helped Statoil develop a strategy to be present on the ground. It is something that we are familiar with in Norway, it is part of the exploration business and something to be expected." said Haremo.

I'm disappointed but this is part of the exploration game. We now change our focus to the East Coast.

Brynjulv Klove, Statoil New Zealand country manager

The permit area in the Reinga Basin was about 85km offshore from Northland.
Under the contract with the government, Statoil's permit ran for up to 15 years in the area.

The government aims to attract as many big explorers as possible to this country where it has said a major oil discovery could be an economic game changer.