Associate Energy Minister Harry Duynhoven today said a long-standing dispute between the Kapuni partners and the Crown over royalty payments had been settled.

The dispute arose because the 1970 Kapuni mining licence set a royalty rate of 5% of the value of gas and condensate at the wellhead, but did not specify how that value was to be calculated.

“The agreement defines the methodology for the calculation of royalty which should prevent disputes arising in the future. It will result in additional royalty payments estimated by the government at approximately NZ$3.8 million over the life of the field, depending on reservoir performance and operating costs.”

Duynhoven said the additional payment included arrears of NZ$1.5 million. The Crown already received NZ$10-12 million a year from the energy resources levy on gas produced from the field.