OMV still plans to exit NZ despite planned reversal of gas exploration ban

Wednesday, 29 November 2023

It is not yet clear if any new exploration is likely to result from the reversal of the former government’s offshore exploration ban.

Austrian oil giant OMV says the Government’s planned reversal of a ban on new oil and gas exploration permits hasn’t changed its plan to sell its New Zealand business.

Nor does it look set to change the scope of what may be its last drilling campaign in the country.

OMV, which is last major multinational oil company with large-scale production operations in New Zealand, announced in February that it planned to sell its oil and gas exploration and production businesses in both Australia and New Zealand.

It said that was in line with its global strategy of becoming a more sustainable fuels and materials company.

However, OMV has been continuing with preparations to next year drill an appraisal well, Toutouwai-2, at a site 50 kilometres offshore from Taranaki where it discovered hydrocarbons in April 2020 in an existing permit.

OMV said in 2020 that early indications were of a “significant discovery”, which would be the first in New Zealand for a decade, but it had to delay further investigations because of the Covid lockdown.

Its spokesperson said it was now looking at opportunities “in and around its existing oil and gas fields” that it could potentially combine with Toutouwai-2 in a separate drilling campaign.

But she said “any follow up would be part of existing exploration licences”, indicating that the new drilling activity would not be dependent on the reversal of the ban on new permits.

“With the restrictions of the exploration permit ban, we have been confined to looking at opportunities within our current licenses,” she said.

The Labour government decided in 2018 to stop granting new offshore oil exploration permits, in a move that was welcomed by environmental groups but criticised by some businesses with interests in fossil fuels.

The new Government’s promise to reverse that ban could be largely symbolic, given the level of interest in new exploration outside of existing permits is unclear.

Former National Party energy spokesperson Stuart Smith said in July that it intended to reverse the ban “not because we think that there'll be a rush of oil rigs coming over the horizon” but indicating instead that its primary concern was the country’s investment reputation.

Energy Resources Aotearoa chief executive John Carnegie said he believed the lifting of the ban “should lead to more natural gas being brought online”, which he said would be helpful for the security of the country’s electricity supplies.

“New Zealand has significant untapped resources that are yet to be explored,” he said.

“We do not expect the reversal of the ban to result in immediate new exploration campaigns. The first developments are likely to be close to existing fields so that operators in the area can use existing infrastructure.”

Carnegie said he did not think it was helpful to speculate on whether a future government might simply reinstate the ban, as the Green Party has indicated it would do.

“A lot of exploration can be undertaken in six, nine or 12 years, as it might be,” he said.

“It is interesting to note that UK Labour leader Keir Starmer has agreed to not rescind any exploration or development permits if his Labour Party is able to form the next government.”