Booming Oil & Gas Ind. Seeks Level Playing Field

2 February 2005

Media Release

Booming oil and gas industry seeks level playing field

The newly re-elected Chairman of the Petroleum Exploration & Production Association of NZ (formerly PEANZ), Donald Morgan, expects that 2005 will be a significant year for the oil industry as a number of issues and activities come to a head.

"Government has thrown the gauntlet down to encourage the industry to seek more oil and gas in order to replace depleted Maui gas and to reduce our dependence on the alarming changes in the price of imported oil products." he said.

"Exploration and production activities are at an all time high, with more rigs than ever drilling new wells, new discoveries being made, such as the new find at Radnor near Stratford and a number of new fields being developed for production, including the two big fields of Pohokura and Kupe."

"Yet all is not well. Domestic self-sufficiency in oil has dropped from 50% in 1986 to only 20% in the year ended March 2004.[1] As well, Government's focus appears to be on finding new explorers to chase new hydrocarbon finds in unproven new areas away from the Taranaki Basin and the infrastructure that will enable new finds to be quickly developed. Whereas, it should be encouraging existing explorers to discover petroleum reserves in known basins and nearer to existing infrastructure."

"PEPANZ2 believes a more balanced approach would be to extend the incentives for exploration to the whole country, so that existing promising prospects in Taranaki can be exploited as well."

"The industry is not asking for handouts or advantages that other businesses can't access. But some aspects of the current royalty regime and some of the tax provisions that apply to oil and gas exploration do little to stimulate oil and gas field exploration and development, despite recent much-welcomed Government initiatives such as the waiving of the 183-day tax rule for foreign-owned offshore rigs and seismic vessels, and the removal of the previous ring-fencing of exploration expenditure within royalty calculations for new mining permits, "he said.

"The Government is seeking feedback right now on New Zealand's oil supply security, but is focused on compliance with an arbitrary International Energy Agency target of 90 days' worth of storage.

"PEPANZ firmly believes that stimulating domestic production is considerably more significant and important than meeting the 90-day IEA target. The Government should be doing everything it can to ensure indigenous oil reserves and production is at a level where New Zealand is as close to 100% self-sufficient as possible." Mr Morgan noted.

Mr Morgan said the industry welcomed the new Energy Minister Trevor Mallard. "We look forward to ensuring he is fully informed about these issues, and to working with him and officials to have them resolved."

Ends./

NOTE:

The Petroleum Exploration Association of NZ (PEANZ) has recently changed its name to the Petroleum Exploration & Production Association of NZ (PEPANZ), to reflect the fact that many of its members are petroleum producers, and that many of the issues it becomes involved in relate as much to production as exploration. The formal re-branding is underway - all contact and other details however remain the same,

Email peanz@xtra.co.nz (although this will eventually change)

Web www.peanz.org (although this will eventually change)

Chairman Donald L Morgan of Swift Energy NZ

Deputy Chairman Kevin Johnson of Bridge Petroleum

Executive Officer Dr Mike Patrick

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[1] Energy Data File, Ministry of Economic Development, July 2004

2 See Note below.

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