OMV Soars on Pohokura Oil and Gas Profits
By WEIR, James
AUSTRIAN-BASED international oil and gas company OMV more than doubled its profits to $95 million in New Zealand last year as the Pohokura field came into full production.
The $56.8 million leap in OMV’s profits, disclosed in Companies Office documents, is indicative of Pohokura’s profitability, with production starting in 2006 but increasing massively in 2007.
Industry watchers say the Pohokura field, off Taranaki north of New Plymouth, is the unsung hero of the New Zealand oil and gas sector. It is enormously profitable for its partners, with gas prices struck a few years ago when prices were at a peak, one source said. Pohokura produced about 70 petajoules of gas last year.
OMV holds 26 per cent of Pohokura. New Zealand’s Todd Energy has 26 per cent and Shell has 48 per cent.
“It will be a very profitable field, you just don’t hear about it because they (the partners) are not listed here,” an industry source said. However, the oil business was risky and expensive, so investors had to “make hay when they get a good one”.
OMV’s managing director in New Zealand, Steve Hounsell, said last year’s profit was in line with expectations.
Asked how much the company paid in royalties to the Crown, Mr Hounsell said: “Too much — it is a lot of dough.” He could not give a specific figure, but said it was 5 per cent of revenues or 40 per cent of accounting profits.
The most recent official figures show the whole industry paid $135 million in royalties to the Government in 2006, but with rising oil and gas prices and a big jump in production, royalties are believed to run into hundreds of millions.
However, OMV is frustrated by bad weather delays in getting a drilling rig to its next field, Maari, with swells up to 14 metres. It needs two or three days of settled weather to move the rig.
The 50-million-barrel Maari field had been expected to start producing in the third quarter. It is now looking more like the last quarter, with OMV revenues and profits likely to jump again next year, with peak production of an estimated 35,000 barrels a day.
“We maybe missed a month on the rig,” Mr Hounsell said yesterday. Maari is costing about $500 million to develop and OMV has a 69 per cent interest.
OMV is also one of the partners exploring in the Great South Basin, off the bottom of the South Island.
Fellow explorer Origin Energy said last week it planned to drill an exploration well during the next year in the Canterbury Basin, off the coast from Dunedin.
Asked if OMV would be interested in taking a share in the Origin project, Mr Hounsell said it had looked at the area in the past. Interest might be galvanised when Origin lined up a drilling rig, though costs of drilling had risen significantly in recent years.
OMV also holds 10 per cent in the giant Maui gas and light oil condensate field, which has been running for close to 30 years but is on a long-term decline. Mr Hounsell said Maui production could also be affected by power generation companies using less gas and running hydro power stations more, holding gas for the future.
Economic Development Ministry figures show that Maui’s oil and condensate production fell from 3.8 million barrels in 2006, to 2.1 million last year. Maui gas production dropped from almost 93 petajoules in 2006 to 55PJ last year.
In contrast, Pohokura’s gas production jumped from 14PJ in 2006 to almost 70PJ in 2007. Total national demand is 150PJ a year.
The ministry’s latest information says Pohokura’s total gas reserves are now 978 billion cubic feet, equal to almost 1000PJ.
In the past, Pohokura gas was said by industry experts to cost about $6.50 a gigajoule — about 2.5 times more than the original Maui gas. A petajoule is one million gigajoules, suggesting the Pohokura gas could be worth roughly $6 billion over the decades- long lifetime of the field.
Pohokura’s oil reserves have been increased, from 44 million barrels to 61.6 million. At yesterday’s oil price of about US$118 (NZ$162) a barrel, they would be worth close to NZ$10 billion.
* Austria’s largest listed industrial company.
* OMV profit in New Zealand last year: $95.4 million, up 147 per cent.
* New Zealand revenue last year: $295.2 million, up 130 per cent.
OMV’s main interests:
* 26 per cent of Pohokura oil and gas field.
* 10 per cent of Maui gas field.
* 69 per cent of Maari oil field, due to start production late 2008.
* 36 per cent stake in Great South Basin exploration.
(c) 2008 Dominion Post. Provided by ProQuest LLC. All rights Reserved.