Dispute over, New Zealand renews hunt for offshore oil

After a three-year dispute over financial terms covering exploration for offshore oil, the New Zealand government and some international oil companies have thrashed out a "compromise" to get the search moving again.

As a result, Shell, British Petroleum, and Todd, a major consortium with a big stake in the Maui natural gas field (hailed by politicians as New Zealand's energy savior over the next decade), will resume searching this year in the promising Taranaki area of the North Island.

Shell, BP, and Todd had been scared off by an earlier government plan to slap a $3-a-barrel levy on any oil found in New Zealand waters. But now the group is searching for a suitable rig.

Negotiations have resumed also with the Seahunt Group, which represents some world leaders in expertise, equipment, and geological information. The froup comprises Hunt International, Phillips Petroleum of Oklahoma, Placid Oil of Dallas, and Impel Corporation of Colorado.

This group, alarmed by the proposed new tax, had abandoned a $50 million (N.Z.) investment ($1 N.Z. equals about $1 US) off the south of the South Island , complaining of government "nationalization."

Hunt's oil search around New Zealand had looked most promising, and the company had indicated a willingness to spend up to $100 million.

In the meantime, New Zealand's oil import bill has jumped from $530 million in 1977-78 to $730 million in 1978-79. This fiscal year it could be $1 billion, according to experts here.

The worsening oil situation forced the government to accept that the companies must have the ability to make a reasonable profit from New Zealand oil if they are to be encouraged to explore at all.

Phillips Petroleum discovered one of the major North Sea oil fields. A viable find in the Great South Basin, where its group had previously sunk five wells, would be in conditions similar to the inhospitable North Sea field.

The New Zealand Petroleum Company also has a link with a company, understood to be Triton Ltd., for drilling off the West coast of the South Island, an area rich in coal.

All this oil activity is part of an accelerated program by the government to make the country at least 50 percent self-sufficient in motor fuels and oil products by 1985. The ambitious program could cost up to $3 billion, much of it borrowed.

William F. Birch, the energy minister, who is considered highly able, summed up the country's problem when unveiling the blueprint: "Without adequate supplies of liquid fuels there will be no growth. Without adequate supplies the national security is jeopardized."

Mr. Birch warned New Zealanders of energy restrictions over the next few years. These have already begun. A carless-day program deprives driving-happy New Zealanders of the family car for one day a week. Getting caught could cost up to $200.

Gas stations are closed most of Saturday and all of Sunday, aviation fuel and diesel are on quota, and the threat of rationing looms oil prices continue rising and supply is seriously disrupted.

New Zealand's trouble is that oil costs it more than its entire income from dairy products, one of three main sources of agricultural income. Wealthier countries like the United States can afford to outbid it for dwindling supplies on the spot market.

So the government is looking to development of liquid fuels from the Maui natural gas field, one of the world's largest, to substitute for reliance on imported oil.

With this prospect, New Zealanders don't appear to mind buying a bicycle for their carless day or channeling their summer holidays to meet the energy crisis.

The government has already announced a $300 million expansion of the Marsden Point oil refinery and acceptance of a Mobil Oil formula for producing methanol from natural gas.

The government pushed through a National Development Bill in Parliament designed to set major energy projects on a "fast track" through the planning stage. The bill caused an outcry among environmentalists, local politicians, and civil- liberties supporters, as it appeared at first reading to bypass acceptted procedures and place undue power in the hands of the energy minister.

After a controversial passage through Parliament and public agitation against the bill, it was passed just before Christmas.The bill will prevent costly delays. Says Mr. Birch, "The move is to bring procedures before one tribunal and avoid endless appeals and litigation." Moreover, it gives the government the green light it needs to develop New Zea- land's considerable natural energy resources.

New Zealanders have finally accepted that the oil crisis is upon them, too.

You've read  of  free articles. Subscribe to continue.
QR Code to Dispute over, New Zealand renews hunt for offshore oil
Read this article in
QR Code to Subscription page
Start your subscription today