Contact Energy spokesman Pattrick Smellie today told EnergyReview.Net that his company had been served papers earlier this week and named as a defendant by Methanex NZ. He confirmed Contact had issued a brief statement on the matter to the New Zealand Stock Exchange just before it closed yesterday.
The Independent Expert, Texas-based Netherland Sewell and Associates International, is the main party to the proceedings, with Contact, the New Zealand government, field owner Maui Development Ltd and NGC Holdings also named as defendants.
Smellie admitted Contact would oppose this challenge by Methanex to the redetermination process, but declined to say anything further as the matter was now before the courts and subjudice
EnergyReview.Net on Monday said such a challenge was likely over the methodology used by NSAI to reach its conclusions as Methanex, this country's largest gas user, had said it and its advisors were currently studying the report and considering the various courses of action open to it.
Last Friday Methanex Asia-Pacific vice-president Bruce Aitken admitted to EnergyReview.Net that the final NSAI report, which essentially says Methanex has no further entitlements to Maui gas, had hit the company very hard. He said Methanex was "down but not yet out" and would retreat to its corner to study the extensive report. NGC Holdings said the report showed Methanex had in fact consumed 77 Petajoules than it should have.
Now Methanex has come fighting. It is understood the company has launched the High Court action as it disagrees with aspects of the process undertaken by NSAI to arrive at its conclusions.
Aitken could not be contacted for further comment as he was in meetings in Wellington today.
Commentators agree Methanex is simply in survival mode. "When you are facing the firing squad you will exhaust every avenue to delay the inevitable," said one today.
Methanex would be looking at the NSAI conclusion that only 370 PJ was all that could be economically recovered from the field "at the Maui contract price". This was an indication that there was actually more gas there, "if the price is right", said the commentator. Methanex would be trying to find ways to challenge this assumption and have whatever volume of gas there was somehow included in its reallocation, which may be nothing right now.
The commentator said a big issue would be Contact's and NGC's wanting to accelerate their take of gas in order to meet demand and likewise accelerate their access to pre-paid gas. MDL would also like acceleration as it would mean more condensate extracted more quickly. However, if the parties did not accelerate their take of gas not all pre-paid gas might be available at the end of the contract.
He echoed Contact chairman Phil Pryke's concerns about the state of the New Zealand energy industry.
"With only 370 PJ left, it now looks like Pohokura may not come onstream in time to avert a supply shortage to the electricity industry about 2005-2006, or possibly be large enough even if it could.
"If the government has any plans to come out with a national energy policy, now is the time."
Having electricity generators switching some gas-fired power stations to coal or fuel oil, as suggested by Energy Minister Pete Hodgson, was not reconcilable with New Zealand signing the Kyoto Accord. "Add to this mix Shell's possible exit from New Zealand exploration over the next few years and things are looking pretty bleak," the commentator concluded.
