Genesis says it has entered into exclusive commercial negotiations with Austral-Pacific regarding the funding of Cardiff-2 well, the equity interest and deep gas rights.

Austral-Pacific chief executive Dave Bennett has previously said the 29sqkm Cardiff prospect has the potential to hold over 1tcf of deep gas from the Eocene-aged Kapuni formation.

Genesis chief executive Murray Jackson said he was pleased to have signed a Memorandum of Understanding with Austral and that the proposed commercial arrangements should result in Cardiff-2 being drilled later this year.

Bennett and Jackson agreed that the application of modern drilling and testing techniques could establish substantial amounts of new gas in the Taranaki Basin.

“In addition, the proximity of the Cardiff prospect to existing gas infrastructure should result in a fast track development, in the event that commercially recoverable reserves are established.”

Jackson said the arrangements demonstrated Genesis' commitment to an active role in accelerating gas exploration activity in New Zealand in order to bring gas to the market as soon as possible.

The announcement means more upstream involvement for the electricity generator and gas wholesaler-retailer and comes hard on the heels of its involvement with a LNG feasibility study (with Contact Energy), its divestment of Kupe operatorship.

Other downstream players are also entering similar arrangements, such as NGC’s deal, also with Austral, for the onshore Kahili gas field development.