Last Friday afternoon the commission said it was considering an amended proposal, which would let the Pohokura partners jointly sell their gas in certain circumstances, rather than the commission’s blanket revocation of its previous authorisation, as outlined last February.
The commission said the Pohokura partners had told it there were three occasions where gas output from the field could be uncertain, with associated difficulties marketing and selling that gas separately.
These were: gas produced during commissioning; ‘peaking gas’ produced above the rated output of the field for limited times; and gas produced at the end of the life of the field.
The commission said initial commissioning would be deemed to have ended once any partner supplied any gas under any existing gas supply arrangement.
The “end of field life” would be when an independent expert had determined that P2 (proven and probable) reserves of economic gas had fallen below 25PJ.
The commission said it was now looking at granting a substitute authorisation for joint selling of specific categories of gas under those limited circumstances only. It called for further submissions by November 14.
In February the commission said it was considering revoking the Pohokura partners’ right to jointly market and sell gas because of false or misleading information given to it or material changes in circumstances.
The partners spent over a year saying they could not market or sell Pohokura gas separately, telling the commission in 2003 that separate marketing would result in at least a three-year delay in production from the field.
But the commission concluded separate marketing would delay production by only one year and it later reluctantly agreed to joint selling, saying the considerable potential benefits of early production (estimated at NZ$47.8-81.9 million) outweighed the significant detrimental lessening of competition in the gas production market.
However, several months after winning approval for their joint approach, the partners said they could not reach agreement and were going their separate ways. Shortly afterwards they each announced separate sales to such downstream players as Contact Energy, Genesis Energy and NGC.
