Government plans to boost oil and gas exploration have taken another hit with news that giant United States company Apache is pulling out of an East Coast project.
Apache and smaller Canadian-based operator Tag Oil teamed up to search for oil and gas in the East Coast Basin in 2011.
Apache has now withdrawn from the project, but will continue to fund the $120 million first phase.
In December Brazilian oil giant Petrobras withdrew from exploration off the East Cape.
Both projects were subject to intense opposition from environment groups and local iwi.
John Roper, Apache's manager of public affairs, said the company had many opportunities across its global portfolio and had to make daily decisions about priority for capital expenditure. "We hope Tag is successful in this [New Zealand] project."
Tag spokesman Garth Johnson said the company would see through phase one of the project but could not commit to continuing with phase two until the first phase was completed.
Phase one involved drilling four exploratory wells.
Mr Johnson hoped the results would support additional work and investment. "Whether we like it or not, this is the nature of the oil and gas exploration business around the world and we will treat it as an opportunity."
Green Party MP Gareth Hughes said the Government's oil and gas plans were unravelling.
Not only were international companies pulling out, but American company Anadarko had delayed drilling, less than half of the 2012 block offers for oil and gas permits were sold and the release of the East Coast Oil and Gas Development Study had been delayed, Mr Hughes said.
‘The Government should stop backing the petroleum industry; in reality it is jobs poor and environmentally damaging."
Instead, it should be supporting the renewable energy and clean-tech sectors, he said.
But a spokeswoman for Energy and Resources Minister Phil Heatley said he understood Apache's decision was about focusing on other global opportunities.
It would be premature to speculate on the impact of the decision she said.
Gisborne District councillor Manu Caddie said residents were celebrating Apache's withdrawal.
"Obviously the 2D seismic data Apache collected suggested the resource is marginal at best and, given the high level of concern expressed by farmers, horticulturalists, wine growers, Maori landowners and the general public, they have decided it is not worth pursuing."