ELECTRICITY

Huntly contract decision soon: Genesis

New Zealand energy company Genesis Power is in the final stages of negotiations to select a contr...

It has also said it is negotiating with Shell New Zealand regarding the possibility of Shell sourcing some of the natural gas required for the 400MW combined-cycle plant, which Genesis wants operating by the end of 2004.

The government-owned Genesis is also planning to raise $NZ650 million to build the new station and for business development. It has appointed Westpac Institutional Bank to arrange and underwrite a corporate debt facility of $NZ650 million for its existing and future funding purposes. Westpac is arranging a syndicate of banks to fund the Genesis debt.

Genesis chief executive Murray Jackson said from Auckland that he expected to be able to announce the successful lead contractor for the Huntly project within the month. Genesis was in the final stages of evaluating offers from two overseas manufacturers of the gas turbines and had already obtained the necessary resource consents for the project.

Jackson said about $NZ500 million would be used for the construction of the new power station and the rest for other acquisitions and business development.

As well, Genesis was examining doubling the size of its wind farm in the Wairarapa and developing more biomass power generation as well.

Earlier this month Jackson said Genesis would still be proceeding with its second Huntly station, though fellow power generator and retailer, Contact Energy, had shelved plans for a third gas-fired Power station. Contact chief executive Steve Barrett said the development of its third 400MW gas-fired power station at its Otahuhu, Auckland, site would not go ahead until sufficient gas supplies were guaranteed and the transmission regime applying to new gas supplies sorted out

Jackson said it was planned the undeveloped offshore Taranaki Kupe field, in which Genesis now held a 70% stake, would be the main gas source for the new Huntly station.

Kupe, with proven reserves of about 260PJ of gas and 15 million barrels of oil, would ensure reliable gas supplies for the life of the Huntly combined cycle gas thermal plant and Jackson said Genesis would be the long-term gas purchaser the Kupe partners needed to ensure development was viable.

He said it expected the government, which still held an 11% stake in the Kupe field, to soon exit from the licence, leaving Genesis with its majority share and New Zealand Oil and Gas with 19%.

The government's 11% "free-carry" is a relic from a long-forgotten regime, where the Crown took an interest in exploration licences at no cost to itself. However, it was obliged to contribute financially if it chose to remain as a partner in any subsequent development.

Jackson said he expected Genesis and NZOG to appoint a company to act as operator of the Kupe licence within three months.

Genesis was continuing to talk with all present and possible gas suppliers in New Zealand - from the established majors such as Shell NZ and Todd Energy, to smaller firms such as Swift Energy, which recently started delivering gas from its south Taranaki Rimu oil field to Genesis as part of a long-term (10-year) contract.

"We are talking with the Pohokura partners (Shell, Todd and Preussag Energie) and all the other gas providers, including Indo Pacific and Greymouth."

Contracts regarding the delivery of gas from other Taranaki fields were being finalised, Jackson added.

Genesis produces about 18% of New Zealand's power needs and is that country's biggest electricity retailer with 26% of the retail market, about 450,000 customers.

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