OIL PROSPECTING Off-shore Licensing Conditions Defined

Press, Volume CIX, Issue 31985, 12 May 1969, Page 26

OIL PROSPECTING Off-shore Licensing Conditions Defined

(New Zealand Press Association)

WELLINGTON, May 11.

The Minister of Mines (Mr Shand) today defined the conditions governing the granting of oil prospecting licences for off-shore concessions to overseas consortia.

Mr. Shand’s statement follows a New York report that the Magellan Petroleum Corporation had applied, with other partners, for rights to explore four off-shore blocks totalling about 30,000 square miles in Cook Strait, the Kermadec Ridge, areas off Mount Egmont and the Chatham Rise.

The Minister emphasised that licences were conditional upon supply of a satisfactory work programme and the carrying out of the programme by the prospecting company. Non-compliance with the conditions of a licence, issued for a maximum of five years at a time, could result in cancellation or non-renewal, he said. Mr Shand also detailed rentals and royalties payable by the exploration companies. Mr Shand said that Magellan Petroleum, N.Z., Ltd, at present held, for five years from October, 1968, five prospecting licences over a total of 11,654 square miles of the continental shelf off Northland (10,140 square miles), and Gisbcrne and territorial waters off North Auckland. Four Licences The company had applied for four licences over areas of continental shelf and terri-

tonal waters aggregating 25,741 square miles. Mr Shand said he had approved the granting to the company of a licence over 8590 square miles of the continental shelf off Otago and Southland, but the company had not yet confirmed its acceptance. He had approved in principle a licence over areas of territorial waters and the continental shelf off Wellington, Wairarapa and Marlborough. This approval was for a smaller area than the 816 square miles applied for. The company had accepted this offer but had yet to submit certified plans and descriptions of the amended areas.

Being Examined The company’s application for licences covering 14,849 square miles in the vicinity of the Kermadec Ridge was being examined, and a further application for a licence over 1486 square miles of the continental shelf off the Taranaki coast could not be dealt with until the

boundaries of areas applied for earlier by other companies had been finally determined, said Mr Shand.

The Minister said licenceholders must prospect, survey, and drill at least one well within the five-year period. They paid an annual rent of 50c a square mile of the area of their licence and were required to lodge a deposit as a guarantee of compliance with the terms of their licence. Selling Value In addition they must pay a royalty of 5 per cent on petroleum casing head spirit and natural gas, payment was assessed on selling value at the wellhead. These prospecting licences conferred the sole right to prospect over the area they covered. If the conditions of the prospecting licences were complied with the holder could apply for a petroleum mining licence, said Mr Shand.

These licences were issued for a term of 42 years, renewable for a further 21 years. The conditions were much the same as applied to prospecting licences. Holders of petroleum mining licences had to pay royalty of 5 per cent assessed on the selling value of products at the wellhead, and an annual rental of $lOO a square mile. Tax Payable

If an oil venture proved successful then, in addition to the fixed royalty, the company paid tax of about 50 cents in the dollar. After mining taxation, special allowances for spending on development were taken into account