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Contact Granted Petroleum Exploration Permit

Contact Granted Petroleum Exploration Permit

Contact Energy announced today that it has been granted a petroleum exploration permit by Crown Minerals for an area in the offshore Taranaki basin.

The area lies close to a number of permits held by other parties, which have recently shown encouraging results from test drilling. As a condition of receiving the permit, Contact will begin a programme of studies to further assess prospectivity within the permit area. Provided the results of these studies are positive, Contact expects the drilling of an exploration well would begin in 2007.

Contact Energy’s chief executive, Mr Stephen Barrett said “The move to obtain this permit is part of Contact’s broad strategy to identify and secure a range of future energy sources for New Zealand.”

“There is general consensus in the industry that the level of exploration activity in New Zealand needs to be significantly stepped up if domestic gas is to remain a key energy source for the country” said Mr Barrett.

“We have been working across a range of fronts to stimulate greater upstream gas activity. Earlier this year we announced an initiative with Mighty River Power to establish a gas exploration drilling fund. This fund will target gas prospects that can be brought into production in the next few years. This is a critical period as it coincides with the rundown of the Maui gasfield.”

“Looking out beyond the end of this decade, the most likely source of significant domestic gas is the offshore Taranaki basin. We have been in dialogue with a number of parties who have interests in that basin, and we have signalled our interest in purchasing gas from successful explorers”.

“While those discussions have been encouraging, Contact is concerned that relying solely on existing explorers may not result in a sufficient level of activity. For this reason, Contact has decided to become more directly engaged in progressing upstream activity.

“It is important to get timely information on the real gas supply potential in the Taranaki basin. The long lead-time to develop a sizeable new discovery means that it would need to be identified in the next few years, if it is to play a useful role in meeting gas demand.

“Conversely, if the Taranaki basin proves to be unproductive, it is important to know that soon so that New Zealand can make the best choice from among the alternatives which include more renewables, coal and/or liquefied natural gas.”

“This initiative will be progressed within an appropriate framework to reflect its risk profile, and will be pursued in parallel with the other workstreams that Contact already has underway.

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