UPDATE 1-New Zealand awards 10 oil and gas exploration permits
* Ten permits awarded, most in Taranaki
* Permit holders commit to survey, wells (Adds detail, government comment)
WELLINGTON Dec 11 (Reuters) - The New Zealand government has awarded 10 five-year oil and gas exploration permits on Tuesday, including in the rarely explored waters in the country's southern region.
The majority of the five onshore and five offshore permits were awarded in the Taranaki region, which has all the country's commercially producing oil and gas wells, with production worth around NZ$2.5 billion ($2.1 billion) a year.
A joint venture between Shell, OMV Limited , and Mitsui E&P Australia Pty Limited will drill in the seldom tapped Great South Basin off the eastern coast of the South Island.
Shell has a 50 percent share of the offshore project, which will explore around 8,500 square km (3,280 square miles) of deep sea bed, in a region prone to rough conditions and storms.
Offshore and onshore permits were issued to New Zealand Oil and Gas Ltd, Cheal Petroleum Limited and East West Petroleum (NZ) Limited, NZEC Limited, TAG Oil (NZ) Ltd , Todd Exploration Limited and Cue Taranaki Pty Ltd to explore the Taranaki Basin on the west coast of the North Island.
U.S. based Anadarko, won two offshore permits to explore around 7,000 square km of the previously unexplored Pegasus Basin off the southern tip of the North Island.
"The award of two permits over the previously unexplored Pegasus Basin and another in the Great South Basin confirms the potential prospectivity of New Zealand outside Taranaki," Energy and Resources Minister Phil Heatley said in a statement.
Permit holders have committed to carrying out seismic survey work and in several of the onshore areas drilling exploration wells.
Heatley said the projects were expected to see initial spending of NZ$82 million, and could ultimately lead to expenditure of NZ$776 million in five years.
A total of 23 blocks were offered, with bids received for only 13 blocks.
Last week, Brazilian state-controlled oil giant Petrobras handed back a permit to explore a deep sea prospect off the east coast of the North Island, because it had not found sufficient signs of oil and gas to justify further spending. ($1=NZ$1.20) (Reporting by Naomi Tajitsu; Editing by Ed Davies)