Kea Petroleum has shut in production at its Puka site in Taranaki.
The company said it had been working hard to resolve problems with the Puka-1 well, while continuing to produce from Puka-2.
A spokesman said the current problem cannot be resolved with the equipment currently available.
He said: “An alternative longer term plan is under consideration however given the current oil pricing environment, the Board has decided that the site is shut in until the economics of continued site operations improve.
“The Company is continuing to work with potential farm in partners for its Mercury, Mauku and Shannon prospects in PEPs 52333, 381204 and 51153 respectively.”