Chief executive Phil James said NGC continued to generate strong operating cash flows, of NZ$130.8 million, despite mixed trading conditions - uncertainties around the discussions on future Maui gas delivery profiles, but significant growth in an increasingly buoyant LPG market.

Total gas sales declined by 18% to 32.8 Petajoules, with sales for electricity generation decreasing by 45% to 8.4 PJ and for petrochemical manufacturers declining by 8% to 8 PJ.

By contrast, total LPG sales increased by about 8% to 155,000 tonnes, with LPG produced and sold by NGC retail subsidiary On gas increasing by about 9.4% to 22,807 tonnes, and LPG distributed domestically by NGC subsidiary Liquigas increasing by about 16% to 52,867 tonnes.

James said the six months had seen considerable operational accomplishments for NGC - with the Kapuni gas treatment plant returning to full processing capacity and further development of the gas gathering project involving bringing Kahili gas onstream by mid-2004.

However, he warned revenues and overall margins were expected to be lower in the second half, with decreased net earnings due to the very different capital and debt profile following the capital return. Net earnings for the first half were likely to represent around 70% of the full-year result.