The Press TUESDAY, JUNE 4, 1974. Oil exploration

Press, Volume CXIV, Issue 33551, 4 June 1974, Page 14

The Press TUESDAY, JUNE 4, 1974. Oil exploration

Prospecting for oil is an expensive gamble which very often does not pay off. The Government’s announced intention to participate in the development of oil finds in New Zealand will not stimulate petroleum prospecting unless the State shows its readiness to share the prospecting risks as well. Promising geological formations are rare in New Zealand: the most likely of them have been explored and so far. only the Kapuni and Maui gas fields have yielded significant finds. Last vear. although geological and geonhvsical survevs continued, no new prospecting wells were drilled.

About 140 nrospecting licences are in force. They cover one-fifth of New Zealand and its territorial sea out to the three-mile limit: 20 other licences cover 300.000 square miles of the continental shelf where, under the Continental Shelf Act, 1964, New Zealand Haims to control exnloration and exploitation of natural resources whore the seabed “ lies at a “ denth no greater than ’OO metres below the surface “ of the sea. or. where tho natural resources thereof “ are canab’e of exnloitation, at anv greator (tenth ” Licences are granted for five vears with the right of renewal for a further five, exnln ’ ,?t’on has been pursued with “ reasonable dilieonoe ”, Licences for a number of nrnmisine areas exnire this year, and the Government mav have this in mind when asserting its interest in the shared development of oil and gas fields.

Accordin'* to the Minister of Mines (Mr Colman) comnanies will receive new nrospecting licences onlv on the condition that Government will take a stipulated share in the development of any find. In return, prospecting companies should surely have guarantees that an annmnriate share of their exploration costs will bo met The formula used to determine the value of the Government’s hi»lf share in the exploitation nf Ma>'| w has nrov’dafl a nrocedent Thjs would he nrofgrahio tn th® State itself undertaking nro cno cting «-birh co"i*i be a series of expensive failures Rut as the nrioo of jmnorted nil Increases, and as sunnlies remain uncertain, the Government would he wise tn onrnura< , e more vigorous searching bv the holders nf nrnspectin o ' licences, rather than make anv suggestion that it is out to assure itself a share of any find at the lowest possible price, ft mav have to go further than it now plans and show that it is nrenared tn share the losses on exnlorat’on as well as buy a share of the successful ventures.