OMV and its partners Beach Energy and Mitsui are planning one well about 146 kilometres off the coast south-east of Balclutha. It will be the country's southern-most offshore well in 36 years.
Should the well be successful, that could be transformative for the New Zealand economy, said John Kidd, head of energy research house Enerlytica. But an unsuccessful well would probably kill any remaining interest international explorers have in New Zealand.
"We need this programme to be successful for a whole bunch of different reasons," he told BusinessDesk.
"In terms of future exploration, I think this is really a defining moment – whether or not our frontier basins will continue to attract international interest going forward."
The Tawhaki prospect lies in the Great South Basin, in a permit OMV and Mitsui have been working since 2007. Last year, OMV told prospective partners the main leads in the permit could hold the equivalent of 3.6 billion barrels of oil and gas.
Former operator Shell committed to drill a well in 2013 but was unable to align its work programme with that of Anadarko Petroleum, which brought the drillship Noble Bob Douglas to New Zealand that year and drilled the unsuccessful Caravel-1 well north-east of Dunedin in 2014.
Anadarko, along with Chevron and Equinor – the former Statoil business – have since departed New Zealand waters, not because of the government's 2018 ban on new offshore exploration but because they have better prospects to pursue elsewhere.
But in the absence of new block offers, the country's exploration effort is rapidly dwindling – despite New Zealand historically being a gas-prone destination in a world seeking more gas to displace higher-emitting coal and oil.
Officials warned in November that exploration acreage had already dropped by more than a quarter since the government's surprise ban 19 months earlier. The 71,000 square-kilometres of ocean permitted for exploration would be halved within two years and down to about 18,000 sq km by April 2025 as acreage is relinquished to the Crown as part of the usual lifecycle of exploration work programmes.
Gas accounts for about 20 percent of the country's primary energy needs and remains important for electricity supplies – particularly during peak winter demand and during dry periods when the country's hydro lakes are low.
The government has been at pains to assure existing permit holders that they are free to continue exploration and will be allowed to develop any discoveries made.
But Kidd said the exploration ban means there is now no interest in New Zealand among the international explorers needed to help fund that exploration and development.
New Zealand Oil & Gas has approached more than 80 potential partners for its two exploration ventures off the South Island. Director Alastair McGregor told shareholders last month that international players consider New Zealand "closed for business."
Even OMV, which is spending $500 million-plus to reinvigorate the offshore Maui and Pohokura gas fields, says the exploration it has underway off Taranaki – and soon in the Great South Basin – could be its last in New Zealand waters without a significant discovery this summer.
And that risk to on-going exploration worries Kidd, given output from both the Pohokura and the Kupe gas fields is now declining.
New Zealand's energy assets are "mature" and without ongoing exploration and development, industry will be forced to import fuel at higher cost and higher emissions, he said.
In the past year alone, Genesis Energy and New Zealand Steel imported a million tonnes of coal due to insufficient supplies of Waikato coal and interrupted gas supplies, he said.
"That's the cost of having domestic fuel constraints."
The Great South Basin has been explored sporadically during the past 40 years. Several wells have produced hydrocarbons but not in volumes considered commercial at the time.
Kidd said the chances of a discovery in frontier waters are low with odds of success about one in eight.
But he said a "Maui-scale" discovery – which is the scale OMV would be seeking - would be transformative for the region.
Maui, discovered off the Taranaki coast in 1969, took a decade to develop and is still producing. It dominated the country's gas supplies until Pohokura came on stream in 2006, underpinned development of the region's petrochemicals sector and fuelled much of the heavy industry on the North Island.
Shell spent about $1 billion developing Pohokura, while Kupe was commissioned in 2009 at a cost of about $1.3 billion.
Should Tawhaki deliver a discovery, nothing would happen quickly, Kidd noted. Further appraisal drilling would be required to quantify the resource and the mix of gas and liquids.
A liquids discovery would probably be developed with a floating production station offshore, while a large gas discovery could potentially be developed to export liquefied natural gas from a floating production facility.
Should gas be piped ashore, it would be part of a major industrial development, potentially making urea or methanol.
"OMV will spend a lot of time, as will the government, thinking about how best to develop the resource," Kidd said.
In 2017, a study conducted for NZOG and Beach showed that successful development of their still undrilled Barque prospect off the Oamaru coast could boost GDP by $15 billion and deliver $32 billion in royalties and taxes over the life of the field.
The model assumed that gas would be brought to shore and used at new methanol and fertiliser plants and would also replace coal at Fonterra's Clandeboye plant.
The cost to develop the field was estimated at $6 billion, while total investment across all industries came to $12.9 billion over 12 years – almost half of which would be spent in New Zealand. About 68,000 jobs would be created.
While the odds against success at Tawhaki – and of further frontier exploration – remain high, Kidd said the potential benefit for the country from a discovery is vast.
"It would be regionally significant if it comes in as prognosed," he said. "In the case of a success, it really does change the conversation entirely."