New Zealand defends energy sector in wake of Shell exit

April 7 (UPI) -- Shell's planned exit from a natural gas field in New Zealand doesn't indicate negativity in the country's natural reserves, a national petroleum manager said.

Royal Dutch Shell announced Thursday it was transferring its assets in the Kapuni gas field to Todd Energy, its joint venture partner. The Dutch supermajor said the sale would "simplify" its operational structure in preparation for more potential changes to its remaining assets in the region.

National Petroleum Manager Josh Adams told UPI the transaction still needs to move through the regulatory process, though Shell signaled its divestment plans several months ago.

"Acquisitions, divestments and company entries and exits are part of the exploration and development lifecycle," he said. "New Zealand has been through a number of such cycles over several decades."

Shell has been on a divestment streak and strategic review since its $52 billion merger with BG Group. In February, the Dutch company unveiled plans to develop the Kaikias deep-water prospect in the Gulf of Mexico, but in March sold its entire onshore interests in Gabon to Assala Energy Holdings, part of The Carlyle Group, for $587 million.

Discovered in 1959, the onshore Kapuni field in New Zealand is the country's oldest producing field. Output peaked in the 1970s and by the early 1990s, British energy company BP exited a joint venture that left Shell and Todd Energy holding the remaining assets.

Adams said in response to email questions that Shell has made significant contributions to New Zealand's exploration and production sector over the past 50 years. If Shell does leave New Zealand behind, it would be farewell to a legacy operator in the country.

"However, it also presents an exciting opportunity for new or existing companies to invest in New Zealand," he added.

New Zealand last month opened an auction for five offshore and two onshore oil and gas basins. Energy Minister Judith Collins said interest was historically low given the downturn in the energy sector last year, but a rebound was expected as markets improve.

Oil is the sixth-largest commodity export for New Zealand. In the four years ending in 2015, the government estimates energy companies invested $5.4 billion in oil and gas exploration. Annually, oil and gas production contributed more than $1.7 billion to the nation's gross domestic product.