Oil and Gas sector

An Expert's View about Energy in New Zealand

Posted on: 28 Sep 2012

New Zealand is dependent on oil and gas for producing electricity and industrial use.

The Oil and Gas sector in New Zealand The New Zealand Oil and Gas sector is currently expanding with new exploration and production taking place in particular in the Taranaki, Canterbury and Great basins. Opportunities exist in the support services, exploration and investment in the industry as it grows. Market overview New Zealand has a large supply of natural resources in particular oil and gas. New Zealand is known for the Maui and Tui fields with one of the first oil wells in the Commonwealth being drilled in 1865 near New Plymouth. The country is dependent on oil and gas for producing electricity and industrial use. An estimated 40-60% of gas is used for electricity generation. Most of the oil that is produced from the New Plymouth fields is refined at Marsden Point. Refining NZ has a specialist oil refining plant located at Marsden Point near Whangarei. The company supplies all of New Zealand’s jet fuel, 80% of diesel, 50% of petrol and 85% of bitumen for roads. The plant was established in the 1980’s with most of the oil used being imported from markets overseas. The company is currently in plans for a NZ$365 million expansion of its petrol making facilities at the Marsden Point plant. The Oil and Gas industry contributed $2.8 billion in 2009 to the New Zealand export industry making it the third biggest export industry in New Zealand. A recent 2011 study by GNZ Science has found that there is over 1.7 million square kilometres of potential oil located in New Zealand with this estimated to be over 700 million barrels located in offshore areas of New Zealand. New Zealand is gaining more international attention through the focus on exploration by companies such as Exxon Mobil, Petrobras, OMV, Mitsui and Shell. Petrobras has recently invested $118 million into a five year exploration project off the East Cape of New Zealand. Shell and OMV have begun exploration of the South basin of the Canterbury coast starting in December 2011 at a cost of over NZ$50 million. New Zealand Oil and Gas is a major New Zealand operator in the oil and gas industry. The company is an independent exploration and production company that owns the Tui and Kupe fields as well as assets in Indonesia and Tunisia. New Zealand Oil and Gas has recently increased initial proved and probable reserves at the Kupe gas and oil field by 13.4% to 489 petrajoules of gas equivalent. Utilico Investments is building its stake in New Zealand Oil and Gas with a now 6.5% stake in the company. Utilico Investments believes that the New Zealand oil and gas companies and opportunities are undervalued in the market. This could provide opportunities for UK companies to invest in the New Zealand oil and gas industry. In July 2012, New Zealand Energy gained continuous production on the Cooper Moki-3 natural gas well. It is a 100% owned Eltham permit in the Taranaki Basin. During the period ended March 31, 2012 the company produced 39,852 barrels. This shows that there are further opportunities for exploration in the New Zealand oil and gas sector. Key opportunities The Oil and Gas sector in New Zealand is set for continued growth. The Government’s Crown Minerals management of oil and gas reserves in New Zealand allows for continual growth in this sector. The New Zealand Government has invested $25 million over three years for continued seismic exploration. Opportunities exist for companies in the UK where experience can add value in the exploration, seismic surveying, drilling, and engineering expertise to the oil and gas fields in New Zealand. The Taranaki Basin has always been the main focus for hydrocarbon exploration and production in New Zealand. The 'giant' Maui gas-condensate field is located in the Taranaki basin with more recent discoveries being made offshore; Tui, Maari, Kupe and Pohokura fields. Oil and gas is currently produced from 21 petroleum mining licences/permits fields, all in the Taranaki Basin. New Zealand's estimated remaining producing field reserves, as at 1 January 2008 were 148 million barrels of oil (mmbbls) for producing fields and 69 mmbbls for non producing fields. This shows that there are still significant oil and gas reserves that have yet to be productive fields. Gas exploration has also occurred in the Raukumara Basin, Canterbury and Great Basins. These basins exhibit oil seeps and exploration data has revealed many structures with hydrocarbon potential. An onshore gas discovery was made in the East Coast Basin in 1998, while sub- commercial discoveries have also been made in the offshore Canterbury and Great South basins. The Raukumara Basin, East Cape of New Zealand is currently being surveyed by Petrobras with the New Zealand Government assisting the company with their $118 million project. The releases of the planned block by Crown Minerals are supported by significant Crown-funded data packs and are open for assessment. The response to date has shown there is strong interest in exploration in New Zealand. The announcement continued the momentum to realise gas reserves for the domestic market and to discover potentially large oil and gas reserves in New Zealand's deep water basins. The New Zealand Government has recently assisted Petrobras in its permit to explore the Raukumara Basin. Petrobras is expected to spend $118 million over five years on the project, with the Government giving them significant assistance to help in the permit process. This shows that the Government is interested in the exploration of the oil and gas fields of New Zealand, in particular new or undiscovered areas. Crown Minerals underwent a review in 2011 with the organisation taking a more focused approach to business operations. This is set to assist in the industry in the future with the government’s outline of developing New Zealand’s natural resources to benefit NZ through GDP and revenue growth for the nation. Utilico Investments have recently outlined that the New Zealand oil and gas industry is undervalued with opportunities to be had in mergers and acquisitions to increase the value of the market. Latest export opportunities in the Oil and Gas sector Latest export opportunities in New Zealand Getting into the market The main opportunities for UK companies in the sector exist in support services, exploration and investment in the New Zealand oil and gas sector. It is clear that the industry is continuing to grow with further exploration into new opportunities taking place in particular in the Taranaki basin and off the coast of Christchurch. This shows that there are opportunities for UK companies to support the industry through support services, exploration expertise and investment into the companies operating in the sector with it being seen by some as an undervalued sector. An Overseas Market Introduction Service report into the New Zealand Oil and Gas sector can further identify opportunities in the market and assist your business to take advantage of them. More about doing business in New Zealand Contacts Market intelligence is critical when doing business overseas, and UKTI can provide bespoke market research and support during overseas visits through our chargeable Overseas Market Introduction Service (OMIS). To commission research or for general advice about the market, get in touch with our specialists in country - or contact your local international trade team. Paul Tuckley, British Consulate-General Auckland. Tel: +64 (0) 9 303 5017 or email: paul.tuckley@fco.gov.uk Hamish Jenkin, British Consulate-General Auckland. Tel: +64 (0) 9 303 5014 or email: hamish.jenkin@fco.gov.uk Contact your local international trade team UKTI Events UKTI runs a range of events for exporters, including seminars in the UK, trade missions to overseas markets and support for attendance at overseas trade shows. Latest events in the Oil and Gas sector Major Events ENEX 2013 Date: 6-7th June 2013 http://www.conferenz.co.nz/conferences/enex-new-zealands-oil-gas-event Useful links More about OMIS and other UKTI services for exporters
Posted: 28 September 2012

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