Subject to ministerial approval, under the new joint venture agreement Shell, a world leader in deep water exploration and production with a 100 year history in New Zealand, will take a 50% share while the existing joint venture partners OMV and PTTEP retain 18% each and Mitsui Australia retains 14%.
Under the farm in agreement, Shell will pay its equity share (50%) of the previous costs of exploring Permits 50119 and 50120 as well as its share (50%) of the costs of the upcoming seismic programme, including a premium for joining the venture, with a total cost to Shell of around US$25 million. Beyond that, Shell will meet its share of costs as a joint venture partner.
OMV New Zealand will remain operator of the Great South Basin permits until the end of the seismic acquisition programme which is expected to be completed in early 2012. The 3D programme itself will be undertaken by the state of-the-art vessel Polarcus Alima and is expected to cover about 3,000 km2.
Shell will become the joint venture’s operator once the seismic acquisition programme is completed.
“We are very pleased to announce these developments which we believe clearly demonstrate the joint venture’s commitment to the Great South Basin. It is important to be geared up for the next steps in the exploration of a frontier basin,” said OMV New Zealand Managing Director Peter Zeilinger.
“We have allocated significant manpower to studying the Great South Basin over the past four years and invested over NZ$50 million to date, with further investment planned,” he said.
In late 2010 OMV and its joint venture partners began an in-depth review of their planning for the Great South Basin. As part of that assessment, the joint venture identified the need for an additional partner with considerable deep water experience and best practice exploration and operating processes.
“We undertook a detailed evaluation of several companies who could meet these tests. Shell’s proven track record as an internationally experienced deep water operator with high safety and environmental standards made them the logical partner of choice,” Mr Zeilinger said.
Shell brings valuable technical expertise to the joint venture from safely delivering more than 20 groundbreaking deepwater projects around the globe. Shell’s membership in the Great South Basin joint venture builds on its continuing investment in Taranaki, where it is a joint venture partner in the Maui, Kapuni and Pohokura fields.
Chairman Shell Companies in New Zealand Rob Jager said the new Great South Basin venture reflected Shell’s continuing commitment to exploration and production in New Zealand.
“Shell has been investing in New Zealand for more than 100 years and safely operating offshore for more than 30 years in the challenging conditions off the coast of Taranaki. We have been impressed by the work of the joint venture to date, and see this as an exciting opportunity to bring our local and global experience to another promising region,” he said.
Exploring a new frontier area is very much a long term process, Mr Zeilinger explained.
“There are no guarantees that drilling will take place, but we are hopeful that the seismic survey will yield positive results. Our focus right now is on carrying out a robust survey,” he said.
Mr Jager said that as the new joint venture partner and future operator Shell is looking forward to working with OMV on the next stage of the project.
“Safety comes first for Shell. We have a Goal Zero operating philosophy which demands no harm to people and protect the environment. Another top priority is to get to know the local stakeholders better so that we have a strong understanding of their views and a positive foundation for continuing engagement over the coming years,” he said.