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NZ puts 23 oil and gas exploration permits up for tender

Friday 8th June 2012

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Traders have pared their bets that the Reserve Bank of New Zealand will follow Australia in cutting interest rates though global risks, especially Europe, and a tepid local recovery will keep the official cash rate unchanged next week and right through 2012. Governor Alan Bollard will keep the OCR at 2.5 percent with his quarterly Monetary Policy Statement on June 14, according to all 14 economists in a Reuters survey.

The bank will lift its benchmark rate a quarter point to 2.75 percent by March 2013 and to 3 percent by June, the poll shows. Keeping rates unchanged next week means Bollard will be making a different call than his Australian counterpart, Glenn Stevens, who this week cut the cash rate target 25 basis points to 3.5 percent.

As of today, markets were pricing in 17 basis points of The Ministry of Economic Development has put 23 exploration blocks, mainly offshore, up for tender in its annual tender round.

The government department is looking for companies to explore the onshore and offshore areas from 2013. The blocks cover over 40 kilometers of offshore seabed and 3 kilometers of land in the Waikato, Taranaki, Tasman, the West Coast and Southland. Tenders close on Oct. 15.

"The blocks cover a number of petroleum basins and a variety of environmental settings and resource types to attract a range of potential explorers with different expertise and interests," David Binnie, general manager of New Zealand Petroleum & Minerals, said in a statement.

The tender process follows consultation with iwi and local authorities over the proposed blocks. The ministry deferred two onshore Taranaki basin blocks, while a number of other blocks have been revised in shape or had conditions attached.

The ministry said it working to have a better relationship with with iwi and local authorities in the lead up to the tender process to improve the way resource developments are managed.

The latest permit round comes in the same week that the Wellington High Court has been hearing and attempt by East Cape iwi and Greenpeace to overturn oil exploration licences granted to Brazilian oil giant Petrobras, claiming the Crown breached its Treaty of Waitangi obligations and failed to carry out a proper environmental assessment.

"We expect gas and oil companies to give high regard to the importance of engaging locally," Binnie said in today’s statement. "The expectation for engagement with the iwi and hapu has been set out in the terms and conditions of the competitive tendering process."

In May, New Zealand Oil & Gas paid AGL Upstream Gas US $3 million to boost its stake and takeover as operator at Taranaki permit, Kaheru. NZOG lifted its stake in the permit to 60 percent from 15 percent. The remaining 40 percent is held by Canadian second-tier oil explorer Tag Oil.

An exploration permit is the first required by operators to develop Crown-owned minerals. Should commercially viable reserves be discovered during exploration, a resource can take up to 50 years to produce, the ministry says.

BusinessDesk.co.nz

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