Small oil producer New Zealand has halted exploration of a potentially major oil field in the wake of the Covid-19 pandemic and increased regulator pressure. New Zealand Oil and Gas (NZOG) won the contract in 2016 to drill an exploration well in the Barque prospect, in the Canterbury Basin to the east of New Zealand, at a projected cost of US$120 million. The company was initially given until June 2020 to drill the exploration well. However, this deadline was extended to 2022 due to the difficulties faced during the Covid-19 pandemic.
The Barque is thought to hold 530 million barrels of crude oil equivalent, presenting huge potential for the country’s small oil portfolio. New Zealand’s proven oil reserves amount to around 64 million barrels, making the Barque prospect a significant place of interest for greater exploration.
However, the planned exploration was high risk, with just a 10 to 20 percent estimated chance of striking oil.
NZOG and partner Beach Energy applied on Tuesday to surrender their permit to explore the basin due to several challenges creating unfavourable conditions for exploration.
If successful, production in the region was expected to earn NZOG $32 billion in royalties and taxes over its lifespan. In addition, it was expected to provide 5700 jobs and increase New Zealand’s GDP by $7.1 billion (US$5.1 billion).
