nz seen as a safe haven for oil exploration

Yet another item from the oil & gas conference being held at the moment in Wellington.

It is always best to invest in a recession, according to United States money manager William Buechler, who runs a Kiwi-Pacific Fund with special interest in the oil sector.

"You make your money on the way down, you just don't know it at the time," he said in Wellington yesterday.

A spurt of oil and gas exploration drilling is underway around Taranaki this summer and Mr Buechler is hoping for "surprisingly good results", with growing levels of foreign investment in exploration.

Last year New Zealand's main exports were milk, meat and then oil, peaking at more than $3 billion, following the success of the Tui offshore oil field. When the Kupe field comes on soon, oil is expected to move to number two export.

"It is moving up and it would only take a few more fields to make a big [economic] impact," Mr Buechler said.

New Zealand is in the top 10 countries for offshore exploration wells this year, tied with major oil producer Nigeria. In total about $200 million is being spent drilling for oil and gas this summer.

"But it doesn't count till you actually find the oil," he said yesterday, during a visit to Wellington for an oil and gas conference.

Exploration had been spurred on by government support through seismic testing programmes which gave away information about potential oil prospects.

"It was a brilliant idea. It lowers the risk for prospective oil companies and gives them a taste for what may be down here," he said.

"And it is working," he said.

But the big payoffs were more likely from newer areas such as the upper Taranaki basin, Northland basin and Raukumara basin.

Buechler Capital Management has about US$200m (NZ$270m) of funds under management and a Kiwi-Pacific Fund with an undisclosed amount invested in New Zealand and Australia.

New Zealand is attractive as a "safe haven" politically for oil and gas exploration, Mr Buechler said.

There were a small number of New Zealand-based oil and gas exploration companies, including the likes of listed company New Zealand Oil and Gas.

But there were also Australian oil companies such as AWE, and the companies operating in New Zealand in some way opened the investment potential to firms from Australia, Singapore and Thailand.

"It is a regional investment," he said.

"But the key is to get major international players here," he said. Once a big player arrived, it could get things moving.

Last month, oil giant ExxonMobil and New Zealand partner Todd Energy delayed a decision to drill in the Great South Basin for 12 months, which some in the industry saw as a negative sign.

The other big oil group with three permits in the Great South Basin off the base of the South Island is Austrian oil giant OMV with its Thai partner PTTEP Offshore Investment and Japanese company Mitsui Exploration and Production Australia.

The involvement of the Thai company was significant as a sign of more foreign money coming into New Zealand, Mr Buechler said.

Another example is United States company Westech which holds half of the Albacore well off the Taranaki coast in partnership with NZOG with 40 per cent and Mighty River Power with 10 per cent. Albacore is being drilled this month.