Oil and gas companies Jadestone Energy and OMV New Zealand have "reluctantly" agreed to terminate the sale and purchase agreement to acquire an operated 69% interest in the Maari Project, offshore New Zealand, citing regulatory uncertainty.
Singapore-based Jadestone in November 2019 agreed to buy OMV's 69% operated interest in the Maari Project for $50 million. The Maari project includes the producing Maari and Manaia oil fields, located within PMP 38160, in the offshore Taranaki Basin, in a water depth of around 100 meters.
Jadestone said Thursday that following legislative changes to New Zealand’s upstream regulatory framework at the end of 2021, "Jadestone has been continually engaged with OMV New Zealand and the New Zealand Government to seek clarity on the processes, terms and associated timeline required to complete the Maari transaction."
"Due to a lack of progress on regulatory approval, and resultant uncertainty over the timing of this approval for the transfer of interest and operatorship of the Maari Project, Jadestone and OMV have now reluctantly reached a decision to terminate the transaction," Jadestone said.
Paul Blakeley, President and CEO of Jadestone said:“Whilst disappointing, we have been signalling that the lack of progress on Maari was an increasing concern and today, almost twelve months after the new legislation came into effect, there is still little to no clarity on what is required from Jadestone to receive the necessary government approval to complete the acquisition.
"Nearly three years after the acquisition was first announced, and with an upcoming license expiry in 2027, this leaves insufficient time to confidently invest in the asset and therefore, despite our best efforts, it is now time to move on.
When balanced against the growing number of alternative inorganic growth opportunities elsewhere in the wider Asia-Pacific region, Jadestone cannot continue to spend time and resources on the Maari process, and we are firm in the belief that this decision is in the best interests of the company.
At a time when energy security is at a premium, and with the pathway to a lower carbon economy becoming more complex, the IEA has highlighted the importance of new investment into currently producing oil and gas fields to ensure maximum recovery of discovered resources.
The Maari Project represented an excellent example of this approach, where we had identified several significant investment opportunities as a result of large in-place reserves and a low recovery factor. Unfortunately, the asset is now unlikely to see the type and scale of inward investment that had been planned by Jadestone.
"My thanks go to our team in New Zealand, who have worked tirelessly on the acquisition, transition planning and strategy for extending the life of the asset."
The Maari oil field is New Zealand’s largest producing oil field. It lies 80km off the south Taranaki coast. Oil is produced from the production wells located on a wellhead platform (Tiro Tiro Moana) and piped to the FPSO Raroa, anchored 1.5km away. Every few months the oil is offloaded to tankers for transportation to refineries in New Zealand and Australia.