Taranaki oil producer Tamarind 'may be insolvent', directors warn

Tamarind's producing fields are connected to the Umuroa, a floating production, storage and offloading vessel.

Directors of Tamarind Taranaki, the New Zealand business of a Malaysian oil and gas producer say the company "may be insolvent".

Tamarind operates three oil fields according to its website, Tui, Amokura, and Pateke in the Tui Area oil field. It is the 100 per cent owner and operator of the fields.

The company's business model is to buy oil fields late in their production life.

When buying fields off other companies, Tamarind assumes responsibility for any remediation costs when the field is closed.

On Monday evening the directors of the company declared in a statement posted on the Companies office website that it "is insolvent or may become insolvent".

On its website, Tamarind said the company needed to be restructured.

"The appointment of the administrators is as a result of a number of commercial factors including a deterioration in oil price amongst others affecting the performance of the Company, which has contributed to the Company's current financial position being unsustainable absent a restructuring."

Tamarind said administrators would directly control the company's "assets, operations and books and records" during the restructure.

One of the koint administrators, Singapore-based Borelli Walsh, is working with Tui's key suppliers to maintain operations and thus avoid liquidation of the business.

A first formal meeting of creditors is planned next week.

A moratorium has been placed on payments to creditors. A meeting of creditors would be placed within eight days of the administrators' appointment.

In September, it was reported that the company had abandoned a planned drilling programme after the first of three wells was unsuccessful.

The wells were meant to extend the life of the fields.

In October Offshore Energy Today reported that BW Offshore, the owners of the Umuroa, the floating production, storage and offloading facility which gathers oil from the Tui area, had been told the contract for the vessel would not be renewed beyond December 31.

Later that month the publication reported that the Norwegian company was pursuing overdue payments in relation to Umuroa, which has been gathering oil at the fields since 2007.

Tamarind's New Zealand office and the company's Singapore-based administrators have not responded to a request for comment.

In a statement, a spokesman for the Ministry of Business, Innovation and Employment, said all permit holders had obligations and liabilities to the Crown.

"These include the payment of fees and royalties under the Crown Minerals Act 1991, the requirement to keep detailed records of activity, submission of an annual report and complying with work programme obligations."

The abandonment obligations of the Tui permit require that once production is complete, the permit holder must "abandon all wells, surface facilities and operating sites in accordance with good exploration and mining practice".

The costs of abandoning a permit can be significant.

When New Zealand Oil & Gas sold its 27.5 per cent stake in Tui to Tamarind in 2017 it received US$750,000 (NZ$1.18m), despite still having significant production potential.

"The sale of the Tui interest allows New Zealand Oil & Gas to realise the present value of remaining Tui reserves while reducing exposure associated with the uncertain end of field cessation costs and timing," NZOG chief executive Andrew Jefferies said at the time.

A separate Tamarind entity, Tamarind NZ Onshore Ltd, holds two petroleum mining permits and two petroleum exploration permits in onshore Taranaki.