“Latest estimated project costs are approximately NZ$800 million, which is considerably higher than originally anticipated,” Origin manager of Investor Relations, Angus Guthrie said.
“These increases are due to higher commodity prices, particularly for steel, and the unprecedented level of activity in the oil and gas market around the world which has occurred as a result of high oil prices and the damage caused to facilities by the recent hurricanes in the Gulf of Mexico.”
But the company expects the economic impact will be partly offset by higher condensate and LPG prices, Guthrie said.
Meanwhile, the Kupe Venture has concluded an important stage of the project, after the Taranaki Regional Council and the South Taranaki District Council granted all onshore regulatory approvals for the proposed development.
In addition, hurdles relating to the offshore consents have been resolved, Origin said. The joint venture would now ask the minister of environment to grant it the offshore consents.
The project is currently in detailed discussions with a number of onshore and offshore contractors, Origin said.
The joint venture is expected to make the final investment decision during the first quarter of 2006. If approved, Origin expects commercial production to start in 2008.
“The Kupe Gas Project is important to New Zealand’s future security of gas supply and there is significant potential for additional gas resources close to the planned development,” Guthrie said.
The Kupe Gas project involves:
• A normally unmanned offshore platform situated over the Kupe Field in 35 metres of water approximately 30km offshore in south Taranaki;
• A pipeline and umbilical connecting the platform to the onshore facilitates;
• A new onshore production station to be located near Hawera producing sales quality
gas, LPG and condensate; and
• Tie-ins to the existing south Taranaki infrastructure.
The Kupe Venture participants are: Origin Energy Resources (Kupe) Limited (50% -operator); Genesis Energy (31%); New Zealand Oil and Gas Limited (15%); and Mitsui E&P (New Zealand) Limited (4%).