Wellington, Dec 18 NZPA - New Zealand Oil & Gas has lifted its stake in Australian oil company Pan Pacific Petroleum to 9 percent.

NZOG announced yesterday that it was seeking to acquire a strategic stake in Pan Pacific so as to increase its exposure to the attractive producing Tui area oilfields in offshore Taranaki.

Pan Pacific has a 10 percent stake in Tui and NZOG has 12.5 percent.

Today NZOG said it had bought 11.26 million Pan Pacific shares at a cost of little more than $4m since its previous announcement, which was made around 3pm yesterday.

Following NZOG's announcement yesterday, Pan Pacific said it had formalised a process to manage any potential conflict of interest issues, as its chairman, Tony Radford, is also the chairman of NZOG.

It took the steps to ensure that directors' decisions were taken without the possibility of any conflict of interest arising from Mr Radford's dual directorship.

Pan Pacific said it had a strong cash position and no debt, placing it in a highly competitive situation given global credit constraints.

As at the end of November, Pan Pacific had retained some $A148m ($NZ178.3m) equivalent in cash. That excluded $US7m ($NZ12m) deposited as collateral to support the Tui floating production storage and offloading lease arrangement.

Australian Foreign Investment Review Board requirements restrict NZOG to a shareholding in Pan Pacific below 15 percent unless review board approval is received.

NZOG spokesman Chris Roberts said the company had applied for that approval, as a matter of course, so it had the option to go up to 19.9 percent.

NZOG was continuing to buy Pan Pacific shares for now.

NZPA WGT mjd nb