Contact told the NZX on Friday afternoon that Maui Development Limited (MDL) –as agent for Maui mining companies Shell New Zealand, Todd Energy and Austria’s OMV – said it intended to offer more gas for sale, subject to the Right of First Refusal (ROFR) arrangements contained within the revised Maui gas contracting arrangements of 2004.
MDL said it planned a ROFR sales process later this gas for the additional gas, which it assessed as being in excess of 200PJ, with Contact having the right to acquire up to 61.6% of any gas offered and NGC the rest.
The additional gas – arising from such exploration initiatives as the two Ihi wells presently being drilled from the Maui A platform – will be outside the original Maui contract and fetch “market prices”, probably $NZ5.50-6.50 ($A4.73-5.59) per gigajoule, say industry sources.
They also say competition for this gas is likely to come from fellow electricity player Genesis Energy (for its new planned Rodney gas-fired power station); methanol manufacturer Methanex (to keep its Waitara Valley plant operating beyond mid-2006); and from Mighty River Power (particularly if the MRP-Swift Energy three-well exploration program fails to find gas for MRP’s Southdown power station).
Contact chief executive David Hunt said the company had always expected further Maui gas would become available, adding that “it is pleasing that the Maui mining companies are now commencing steps to market additional gas”.
However, Hunt cautioned that Contact would carefully evaluate the opportunity to acquire additional gas.
“Contact’s ability to effectively use ROFR gas offered will be heavily dependent on the profile under which it will be delivered, and the terms of supply,” he said.
“At this point, MDL has not advised the likely terms that will apply for this gas.
“Contact’s existing firm gas entitlements can largely meet the company’s core needs until 2010, based on present estimates of gas use. However, Contact’s firm gas entitlements fall sharply from that date.
“While the potential to acquire additional gas through this ROFR process is positive, it will not itself address the longer-term fuel challenges faced by Contact … 200PJ of gas is equivalent to less than two years of New Zealand’s gas demand.”
