Chevron and Norwegian oil giant Equinor have opted to abandon their joint exploration efforts off the east coast of the North Island.
The two firms have applied to surrender three permits they were granted in December 2014. The acreage covers more than 25,000 square-kilometres of ocean – roughly a quarter of the country's active exploration portfolio – and stretches from south-east of Turakirae Head on the southern Wairarapa coast, north towards Hawke's Bay.
The permits were granted for 15-year terms. Chevron said the decision not to proceed with the next five-year stage of their work programmes was based on the firms' broader portfolio considerations and not "policy or regulatory concerns."
"The joint ventures are confident the offshore Pegasus-East Coast Basin can be developed safely and responsibly in the future," a spokesperson said in an emailed statement.
"Having underwritten the seismic campaign and invested in significant geological, geophysical and environmental studies in the Pegasus-East Coast Basin, the joint ventures have been pleased to support job creation and economic expenditure on local goods and services.
"We're also pleased to have contributed to the enhancement of the scientific understanding of the Hikurangi margin in New Zealand."
Chevron is one of the world's largest publicly traded oil and gas producers. It completed the US$54 billion Gorgon LNG project off Western Australia in 2017 and its global oil and gas production last year was equivalent to 2.93 million barrels a day.
Equinor, the former Statoil business, is majority owned by the Norwegian government. It aims to be among the lowest-emitting hydrocarbon producers, and has expanded its interests into offshore wind generation and carbon capture and storage in recent years to meet its own emission goals.
The Labour-led coalition government shocked the industry last year when it banned new offshore exploration. It said at the time that the existing exploration acreage – both onshore and offshore - would be honoured and would be sufficient to maintain security of the country's energy supplies.
Bryn Klove, Equinor's New Zealand country manager, said people will likely speculate that the decision to exit was driven by the change in government policy toward exploration.
But he said the choice was simply driven by the data to date. The firm has bigger opportunities in an international portfolio that covers 30 countries and now also includes solar and wind, he said.
The withdrawal of such major players is bad news for the local sector and the long-term development of the potential gas resources off the East Coast. The waters up the coast toward Gisborne are peppered with gas seeps and the partners had been looking for a potential large-scale frontier-type gas discovery.
Cameron Madgwick, chief executive of the Petroleum Exploration and Production Association, said it is a shame Chevron and Equinor are withdrawing just as the rest of the world is turning to gas as a means of reducing emissions.
"It's a shame these companies will now be looking to produce in countries other than New Zealand.
"We know that companies of this size look at very big scale investments. The Gorgon project in Western Australia for example over its lifetime is expected to add $440b to Australian GDP and create over 60,000 jobs." Madgwick said.
Equinor also has a 30 per cent stake in a 9,800 square-kilometre permit that OMV operates off the East Coast.
Klove said the firm is in discussions with OMV about it taking back that interest.
OMV, which operates the Maui and Pohokura fields, said Equinor's departure is regrettable and the firm is sorry to see its partner leave.
"The government has affirmed its intention to honour all permits and had also reiterated the need for gas for decades yet, while NZ transitions to new energies and renewables," the firm said in a statement.
"Likewise, OMV is dedicated to honouring its permit commitments."