9 Nov 2022

$50m Maari oil field deal terminated amid regulatory uncertainty

9:29 am on 9 November 2022
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Jadestone president and chief executive Paul Blakeley says with the current license expiring in 2027 there is not enough time to confidently invest in Maari. Photo: Supplied

Jadestone Energy and OMV have agreed to terminate a deal for Jadestone to acquire 69 percent of the Maari oil field off the coast of Taranaki.

The $50 million deal was agreed in 2019, but has been caught up in regulatory changes designed to make sure companies can manage oil and gas wells through to decommissioning.

In a statement on its website, Jadestone - a second-tier oil and gas player headquartered in Singapore - said due to a lack of progress on regulatory approval, and the resultant uncertainty, the companies had reluctantly decided to terminate the transaction.

Jadestone president and chief executive Paul Blakeley said with the current license expiring in 2027 there was not enough time to confidently invest in Maari and it was time to move on.

"Whilst disappointing, we have been signalling that the lack of progress on Maari was an increasing concern and today, almost 12 months after the new legislation came into effect, there is still little to no clarity on what is required from Jadestone to receive the necessary government approval to complete the acquisition," Blakeley said.

"When balanced against the growing number of alternative growth opportunities elsewhere in the wider Asia-Pacific region, Jadestone cannot continue to spend time and resources on the Maari process, and we are firm in the belief that this decision is in the best interests of the company."

Blakeley said, at a time when energy security was at a premium and the pathway to a lower carbon economy becoming more complex, the International Energy Agency (IEA) had highlighted the importance of investment into currently producing oil and gas fields to ensure maximum recovery of resources that had already been discovered.

"The Maari Project represented an excellent example of this approach, where we had identified several significant investment opportunities as a result of large in-place reserves.

"Unfortunately, the asset is now unlikely to see the type and scale of inward investment that had been planned by Jadestone."

Blakeley went on to thank Jadestone's New Zealand base staff for their "tireless" work on the project, but there was no word on what the relatively small team's future would be.

Austrian oil and gas giant OMV acknowledged the decision.

"OMV and Jadestone agree to terminate the intended divestment of OMV's stake in the Maari Field," it said in a statement.

"In 2019, OMV New Zealand announced the intended divestment of its 69 percent interest in the Maari field to Jadestone Energy. After ongoing engagement with Jadestone Energy, a mutual decision has been made to no longer pursue the transaction."

The transfer of Maari from OMV to Jadestone appears to be a victim of the Crown Minerals (Amendment) Act which came into force in December 2021.

It sought to prevent a debacle similar to the one at the Tui Oil Field where taxpayers have been left with a bill of more than $300m for its decommissioning ever happening again.

The Tui field was abandoned in 2019 following the financial collapse of Tamarind Taranaki, leaving the Crown responsible for its safe decommissioning.

The new Act makes it more explicit that oil and gas companies are responsible for decommissioning their assets and introduces penalties if this is not done.

Companies who sell a permit or licence are now also responsible for its decommissioning in perpetuity, meaning if the current owner fails to meet its obligations they'll be next in line.

Tougher tests for permit acquisitions have also been introduced.

The Maari transaction had been locked up with NZ Petroleum and Minerals pending final ministerial approval.

The Ministry of Business Innovation and Employment has also been asked for comment.

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