Pua’S Oil Hopes Are

In The Balance

inouncement that Vacuum Oil ests, after 20 years, are re nt to continue providing funds table the search for oil to con • in Papua came as a severe t not unexpected—shock to the \tory of Papua and New ea.

PENDITURE (between £2m. md £3m. per annum recently) :annot, of course, go on in itely, unless the interests con ;d have some reasonable lise that they will find oil. um says the promise has faded, others have not disclosed intentions. e oil industry’s most skilled tists and technicians have been he job in Papua for over 20 (except 1942-45). It seems all the signs and portents in e the presence thereabout of a oilfield. This would be of til lable economic and strategic to the South Pacific, t, so far, they have failed to it. far, 14 wells have been sunk apua by this group of com is. Three or four more wells low being put down, in accord with an engineering and ce programme adopted last lat will happen after the com »n of those wells, no one knows he moment of this writing ch 4). An announcement by Pty., Ltd., is momentarily ex d. understand what is going on, necessary to show the struc of the organisation that, so has spent close to £3O million :.) on this search for oil.

The Structure 3k in the ’Thirties, after much ng and filling among the r oil interests, it finally was d (with Australian Govern backing and approval) that should be boring for oil on scale in the Australian Terri of Papua ( not in the Trustee- Territory of New Guinea); that the respective interests sented therein should be: Approx.

Share per cent.

RICAN —Vacuum Oil .. 45 n lSH— D’Arcy Explora a Co. (a subsidiary of tish Petroleum Co. Ltd.) lally referred to as “Brit- Exploration”, or “Brit- Petroleum” 45 TRALIAN —OiI Search i 10

For purposes of carrying out the job in Papua those three companies or groups formed two operating companies: Island Exploration Co. Pty., Ltd., registered in 1936.

Australasian Petroleum Co. Pty., Ltd., registered in 1938.

The three groups named above hold that percentage of interest in the two operating companies (namely, 45. 45 and 10) ; and for many years now the operations have been carried out in the name of Australasian Petroleum Co. Pty., Ltd. (APC, for short).

The latter has a huge establishment in Papua. The APC staff

alone occupies a whole suburb (Bairiki) of Port Moresby, The drilling programme had no sooner got under way, when in 1942, the Japanese invasion forced the evacuation of Papua. Operations were resumed very quickly soon after the surrender of Japan in 1945; and have continued without interruption ever since, Expenditure on the oil search, at the rate of between £2,000,000 and £3 m . per annum, has been a very important factor in the economic set-up in Papua for several years.

Papua always has felt confident that it would be followed, even more happily, by the establishment

of an oil industry. Cessation of all Income from that source would be a grievous blow to Papua. c goo 000 Needed to , ™ “ 0 frnm The announcement came from London on February 6. It had been found that, in ord ®*to complete the present imcompleted weUs, or bores £BOO,OOO would be needed, over and above the amount provided in conference last June. The Directors of Vacuum Oil had decided that they would not contribute to that £BOO,OOO.

That left it to the other two partners—the British group known as D’Arcy Exploration (a subsidiary of British Petroleum Co. Ltd.) and Oil Search Ltd.

It has been assumed that the latter two will find the money (per haps by introducing another part ner) and carry on. But how they will find the £BOO,OOO, or whether in any event they will continue beyond the pre sent boring programme (boring is proceeding at Barikewa, p ur i ( Komewa 2 and Kuru 2) had not been di sc i osec i up to March 4. , , , „ , Vacuum announced in early Feb ruary.

“This does not mean that the company has abandoned hope for an oil strike in commercial quanti ties in Australian territory, “Total cost of oil exploration in Papua since Island Exploration Co. and Australasian Petroleum Co. were formed has exceeded £27 mil

lion, of which Vacuum contrilf more than £l2 million.

“While the possibility of comr cial oil in Papua has not eliminated, the enormous cos oil search in this forbidding t tory has forced Vacuum to< conclusion that it cannot ju further exploration expenditure yond that required for the wells now drilling unless result] encountered during the compll of these wells sufficiently encov ing to cause us to reassess; position.

“The presence of considerable at Kuru and Barikewa is of intt and the commercial possibility these gas reserves are under e:; ination.”

Directors of Oil Search said felt that the full programme sH be completed and decided to BP within the limits of the pany’s resources.

Any extra money subsc; would slightly increase Oil Sea percentage interest in the oper companies, directors said.

“Wells currently drilling ar on promising structures, so the certainly a chance that oil pro tion may be proved and thus ti form the whole picture,” added.

Prospects Seem Blue

As at this point (March 4)( prospects seem blue. Vacuum; said, in so many words, that • is not enough evidence of the tence of an oil-field to justify' ther expenditure on boring.

There are two bright spots ii picture.

The official references to the; sence of large quantities of might mean that gas is presei commercial quantities. But locality (behind Gulf of Pa; means that the gas will have 1 very good in quality and qua; to make it workable.

The other encouraging thin the persistent report in Sydneys the staff of APC in Papua, sent orders for the purchase every Oil Search share coming the market. Shares are quote between 3/- and 4/- (they been up to 40/-).

If, as Vacuum says, prospeci: not justify continued boring, are worth nothing. If prospects good enough to justify the « partners carrying on, they se are worth more than 3/- or: The staff should know.