ELECTRICITY

COMMENT: NZ Govt’s draft energy strategy shown up by power players

DESPITE the New Zealand Governments lukewarm stance on gas exploration and developments, state-ow...

Mighty River Power is making a play for major interests and a role in exploration in New Zealand, while Genesis is focused on sourcing new fuels to maintain and grow its gas-fired generation portfolio.

The vertical integration into exploration is rational and economically sound given the importance of gas to the businesses. The ultimate objective for both these enterprises is to secure fuel for their electricity generation assets. Successful integration into the upstream market will also probably reduce some supply costs.

The state-owned enterprises actions speak more loudly and are more telling than draft energy strategy produced by their owner, the New Zealand Government.

Clearly, both companies see investment in upstream exploration as essential.

While the draft strategy notes that new gas discoveries “would give investors and consumers more confidence” and mentions past initiatives to encourage upstream exploration, it does not foreshadow any new upstream exploration or gas market initiatives.

As a significant investor itself, and given the importance of investor and consumer confidence to the NZ economy, more was expected from the government in this regard.

But at least the draft strategy calls for people to have their say on the issue of whether further measures are needed to encourage additional gas exploration. I urge New Zealnd petroleum players to do so.

*Bryan Gundersen is a partner of New Zealand law firm Kensington Swan. He specialises in energy & resources and heads the National Energy Team.

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