15 Oct 2012

Oil and gas exploration tenders close

6:53 am on 15 October 2012

Tenders for permits to explore for oil and gas in 23 onshore and offshore blocks close on Monday.

This new approach to allocating exploration rights is part of the Government's plan to attract more investment into the industry and bring the country's oil and gas sector into step with the international market.

The annual competitive block offer approach, which is used in Australia, Indonesia and India, will replace the first-in, first-served method known as 'priority in time'.

The Government says annual block offers allows it to have a more proactive steer over where and when areas are opened for exploration and provide more certainty for industry.

A Government report into future royalty income showed that doubling exploration activity over the next 10 years could increase royalties to $12.7 billion.

Energy News editor Gavin Evans said it is hard to know how the new system will fare but what brings investment is other people's successes.

He said the old system allowed small players to take speculative punts on regions which opened up quite a bit of acreage at different times.

Under the new system, Mr Evans said the question is whether those smaller players will be replaced by bigger, better resourced players from overseas, or whether it will just remove a level of activity.

He said the test of the system will be if there are any new names owning permits at the end of the process.

Mr Evans said the underlying drive is still the same - to try and get overseas companies to come to New Zealand to explore for oil and gas.

But this structure is trying to make it more planned and to match potential explorers to parts of the country where they would like to see work undertaken.

NZOF comment

New Zealand Oil & Gas says the annual block offer approach has worked successfully in other parts of the world.

chief executive Andrew Knight said it will take two or three months to find out how successful the new system is.

Mr Knight said the more activity there is in New Zealand the better.

Anadarko New Zealand manager Alan Seay said the new method makes the whole system a lot more straight forward which is useful for new companies coming in.

The Government will announce who has been awarded permits for which blocks at the end of the year.