Plunging oil prices have forced explorers to scale back plans in New Zealand, some have had to restructure and there could be a sharp decline in capital spending in a sector the Government has backed heavily.

Around the world, explorers are pulling back on drilling programmes, rigs are idle and some companies are eyeing hiring supertankers to stockpile oil while prices are at six-year lows.

Oil prices dipped yesterday with Brent crude closing at US$47.57 and West Texas Intermediate hitting a similar trough at US$45.90 a barrel.

The drop came as Goldman Sachs sharply cut its forecast for 2015 oil prices, projecting the US commodity would hit US$41 a barrel in three months and US$39 a barrel in six months, down from US$70 and US$75 previously.

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Listed New Zealand Oil & Gas says it is cutting back its exploration and the price plunge had the industry reassessing work programmes.

"We're very conscious of it when part of our revenue goes down by 40 per cent and we are always actively managing our portfolio against a range of factors," said NZOG chief executive Andrew Knight.

His company had surrendered permits last year and had not bid in the latest block offers, largely because of the fall in oil prices, which he said could remain low for 18 months to two years.

"Even though we have long investment horizons, the industry does tend to cut back during these times."

Companies must stick to timetables stipulated in permits and NZOG would be part of seismic work being done off the Taranaki and Otago coasts later this summer.

"What you are getting is that a few of the more difficult prospects are being put on the backburner rather than necessarily dumped. The exploration focus has moved to the larger deepwater plays. Those frontier plays are very long term."

Knight said producers did leave oil in the ground when prices got very low but his company's offshore Taranaki fields had not reached that stage.

"In the fields we've got it is still economic even at current prices."

Woodward Partners analyst John Kidd said that even before the price fall there had been a downturn in exploration. "In New Zealand, the ebb in activity that has been coming for some time is in our view now at risk of a much sharper decline than might otherwise have been the case," Kidd said.

Curtailments, deferrals and reviews had been signalled or were underway by NZOG, Kea Petroleum, TAG Oil and NZ Energy Corp.

In the Woodward quarterly outlook for December, Kidd said that while it was the mid-cap players which had taken the lead, if barrel prices continued to tumble then "big oil will inevitably follow".

"It would be naive to think that work programmes would not be at risk should the current oil price environment continue or, worse, further deteriorate for an extended period."

Kidd said those companies with strong balance sheets such as AWE, NZOG and TAG were well placed to weather the downturn and potentially prosper during it.

"As the realities of deteriorating free cash flows and constrained capital market access bite, we expect companies in positions to do so to focus increasingly on acquisition opportunities to take advantage of the market downturn."

The 2014 block offers attracted new big players Chevron and ONGC Videsh and will result in a minimum of $110 million in spending, but this had been muted by the oil price "reality". However, the 15 permits awarded were of a long duration, with an average of 12.2 years.

Oil and gas exploration is a key part of the Government's economic strategy and it has reformed the blocks offer process, provided more information to explorers and clamped down on protests against seismic survey ships in a bid to attract more overseas interest.

Oil is our fourth-largest commodity export after dairy, meat and wood. Oil and gas contribute more than $2.7 billion to GDP each year.

What's driving down prices?

• US oil production has hit a three-decade high.
• Opec is fighting against cuts to production.
• European and Asian demand remains subdued.