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Proposals to explore oil fields in the Great South Basin beyond Stewart Island have been put on hold.
ExxonMobil New Zealand (Exploration) Ltd (EMNZEL) and Todd Energy on Thursday gained Crown Minerals approval to postpone by one year this weekend's deadline for making a decision on going ahead with exploration.
It was due to make a commitment by Saturday on whether it would drill over the next 12 months.
Now the deadline for a decision has been moved to October 10, 2010, and the deadline for drilling to October 10, 2011.
The two companies would now seek other companies to pay a share of costs toward exploration, in return for a share of the project.
Exploratory drilling in waters 500 metres to 1250 metres deep was expected to cost as much as $US100 million ($NZ130 million).
Local interests have been eyeing an anticipated windfall from such spending, with Invercargill mayor Tim Shadbolt expecting tens of millions of dollars to be injected into the regional economy.
Shadbolt has already planned a November trip to Stavanger in Norway to find out how that city coped with its oil boom.
ExxonMobil/Todd was one of two big consortiums which said two years ago they were willing to spend $NZ1.2 billion exploring the basin.
A total of only nine wells have been drilled in the 500,000 square kilometre petroleum basin - six of them in the 1970s by Hunt International Petroleum, working with Phillips Petroleum, with a couple drilled in the early 1980s by Placid Oil.
Crown Minerals, the government's mining agency, split up the basin into 40 different blocks, but has so far allocated prospecting permits for about a fifth of the area - mainly around wells where data was collected by Hunt International.
One went to an ExxonMobil/Todd - which holds 16,390sq km.
Three other blocks totalling 48,000sq km went to Austrian energy giant OMV NZ, its Thai partner PTTEP Offshore Investment Co (36% each), and Japanese company Mitsui Exploration and Production Australia Pty (28%).
They picked up the blocks in the central part of the basin with the greatest thicknesses of sediments, some of which have recorded oil shows.
Local company Greymouth Petroleum planned to explore the northern margin of the basin, in a permit area covering Winton, Gore, Invercargill, the Catlins and a small portion of Stewart Island, including an area of reported oil seeps in Halfmoon Bay.
ExxonMobil's block is 100km from shore and in a water depth of 500 metres to 1000 metres.
Announcing its decision, ExxonMobil today warned: "A decision to drill a well in the permit area will be contingent on the outcome of discussions with parties interested in acquiring an equity position in the acreage".
ExxonMobil project manager, Adem Djakic, said that farming out the costs was a standard industry practice typical of high risk exploration basins such as the Great South Basin.
"The joint venture has spent a significant amount of money on this initial phase of the exploration program so far," he said.
A 3D seismic survey was carried out over four months from December 2007.
Energy Minister Gerry Brownlee said the postponement was not unusual.
"Obviously there is more work that needs to be done before a commitment to drilling can be made," he said.
The OMV consortium was due to make a commitment in nine months time on a decision to drill.
