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Oil major Mitsui quits Tui oilfield stake

Thursday 3rd October 2013

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Japan's Mitsui group has quit its only substantial interest in New Zealand oil and gas production, selling its 35 percent stake in the Tui oil field to its partners in the venture, New Zealand Oil & Gas, AWE, and Pan Pacific Petroleum.

Mitsui sold its interest for a total of about US$14.9 million, with AWE and NZOG paying US$6.4 million apiece and Pan Pacific paying US$2.1 million. It retains a 4 percent stake in the Kupe oil and gas field.

The decision comes just ahead of the most sustained period of new oil and gas exploration and production drilling in many years in New Zealand, and sees Mitsui drop its interest in two planned wells to extend the life of the Tui oilfield, whose output is declining.

According to information published by Energy News in February, Tui produced 2.631 million barrels of oil in 2011 from total recoverable reserces of 41 million barrels, of which 8.8 million barrels remained at the end of last year. Production peaked in early 2008.

Edison Research International identifies Mitsui as one of eight oil "majors" operating in New Zealand.

AWE, the field operator, will increase its interest to 57.5 percent from 42.5 percent, NZOG's holding rises to 27.5 percent from 12.5 percent and Pan Pacific's climbs to 15 percent from 10 percent.

The sale has an economic date of Oct. 1, subject to approval by the Minister of Energy and Resources. A Mitsui affiliate will remain as oil marketing agent for the Tui project.

As part of the purchase agreement, Mitsui will assign its interest in the Oi exploration well to AWE and NZOG, lifting AWE's interest to 31.3 percent from 25 percent and NZOG's to 18.75 percent from 12.5 percent. Pan Pacific's stake is unchanged at 50 percent. Oi is expected to be drilled before the end of 2013.

Under the OI partnership agreement, AWE and NZOG have the option to restore their equity in the well to 57.5 percent and 27.5 respectively in any development through a buy-back of equity from Pan Pacific.

In August, NZOG reported that its full-year revenue from Tui fell to $30.4 million from $42 million a year earlier as the field entered its natural decline phase.

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