This week PEANZ executive officer Mike Patrick said he was extremely concerned at what appeared to be an official government stance that there was no significant future for indigenous natural gas production in New Zealand.

He said the Ministry of Economic Development's "Energy Outlook to 2025" report made sombre reading for the petroleum industry, as it did not paint a very heartening picture for the future of indigenous gas and oil in New Zealand.

The small size of the New Zealand gas market, the lack of gas infrastructure in most of New Zealand, statements from the Minister of Energy such as 'Methanex being part of the problem', an increased long-term role for renewable electricity supplies and a major interim role for coal - all these combined to markedly diminish the attractiveness of this country for explorers.

Explorers required not just an acceptable gas price, but also a sufficiently-sized market into which to sell large volumes of gas in the event of discovery.

"The apparent official position belittles any significant future role for indigenous natural gas, and this will effectively drive away investment in the critical frontier areas of New Zealand for fear of not being able to do anything with any gas discovered. It would matter little if New Zealand had the best fiscal and royalty regime in the world, investment in exploration just would not happen."

Patrick also wondered about the renewable electricity option outlined in the Energy Outlook. "What if the renewable electricity supplies modelled do not eventuate, or are delayed? PEANZ believes that, should such a scenario eventuate, the resulting impact on energy supply and therefore the economy would be catastrophic."

The MED released its Energy Outlook late last month. The report's crystal ball gazing contained several scenarios for renewable energy, indigenous and imported oil and gas to the year 2025. The report said it foresaw renewables playing an increasing role, yet admitted the main driver for electricity generation would be gas, coupled with coal.

Patrick said PEANZ was also very concerned with the government's apparent preoccupation with the downstream market and avoidance of meaningful engagement with the upstream sector in energy policy development.

"Policies and regulations are being promoted and introduced on a one-sided basis without any appreciation of the role the upstream sector has in the overall equation, nor what is needed to urgently promote increased exploration activity. This is reinforced by the fact that the government does not have an overarching energy policy.

PEANZ had advised the government of these concerns and knew that its officials were aiming to develop a package of preferred measures that would encourage increased exploration and gas production.

"But the industry believes much of this work will come to nought if there is any official position that there is no significant future for indigenous natural gas production in New Zealand." Patrick concluded.