New Zealand, particularly Taranaki, stands to lose up to 650 fulltime jobs and $NZ375 million a year if the Canadian-based Methanex Corporation shuts up shop and moves across the Tasman to Western Australia, says the Business and Economic Research Ltd (BERL) study.
The Venture Taranaki Trust commissioned Wellington-based BERL to write the report amid growing concerns that Methanex will close its Motunui and Waitara Valley production facilities, as well as its Auckland head office, unless significant new supplies of natural gas are found within the next few years.
The study showed that Methanex employed the equivalent of over 300 fulltime employees and exported $NZ900 million worth of methanol annually.
But VTT chief executive Stuart Trundle said the report also made it clear that the impact of Methanex went far beyond the facilities themselves, contributing about 40% of total revenue for Westgate Transport, the owner of Port Taranaki, and providing significant downstream benefits for a wide range of support industries.
The BERL study estimated the impact, direct and indirect, of the Methanex presence in Taranaki to be over $NZ1 billion in gross turnover, $NZ375 million in gross domestic product, and the employment of about 650 workers.
The study also examined the role Methanex played in Taranaki's oil and gas industry, and found the company contributed significantly to the industry's ongoing sustainability.
The report has prompted Methanex New Zealand boss Bruce Aitken to again call for renewed efforts to find and develop the gas fields necessary to keep Methanex in this country beyond 2005.
Methanex was not prepared to be part of the high-risk exploration business, but Aitken said it could become involved financially in the development of large gas fields.
"We have shown a willingness to do anything that is going to get that gas developed. We are not an oil and gas explorer but there are a lot of things we could do to help with the development of gas resources," Aitken said from Auckland.
"We could put up capital, sign significant long term take or pay contracts. Our role is in providing a market for significant quantities of gas and we would be delighted to buy gas from anyone at the right price."
He was encouraged by the huge interest in the latest Taranaki blocks offer, which attracted 41 bids by 21 companies for the 26 permits involved. The recent offshore Pohukura gas discovery and the more southern Rimu-Kauri oil finds had encouraged Methanex that significant fields still remain to be discovered.
While it was likely the 1tcf-plus fields needed to replace the dwindling Maui resource would be found offshore, Aitken said any attractively-priced gas would be of interest. Methanex last year started taking gas from the 101bcf Mangahewa gas field, located just a few kilometres inland from the Methanex plants.
Methanex' preference was to stay in Taranaki, but Aitken conceded the next two years would be critical.
Late last year Methanex signed a gas supply contract for a two-million tonne methanol plant to be built on the Burrup Peninsula in Western Australia by late 2005. Capacity could also be doubled by the construction of a twin plant if Methanex closed its New Zealand operations post-2005, to ensure Methanex continued meeting or expanding its methanol market share in a growing Asia-Pacific region.
"The ideal scenario would be to have both plants in Australia and New Zealand operating in tandem, supplying the expanding Asia-Pacific methanol market," he said.
"We are keen to remain in New Zealand and are optimistic that there is more gas to be found."
He said Methanex had to pay about $US1 a unit for gas to remain competitive with Middle East methanol plants. The floor was about $US1 and ceiling, which Methanex could pay in times of very strong methanol prices, was about $US2.
The BERL report also identified the importance of Methanex as an example of foreign direct investment in New Zealand, which had brought new technology and export markets. The result had been significant contributions to gross domestic product and employment, both in Taranaki and nationally.
Methanex also made big fiscal contributions to New Zealand, paying the usual taxes and charges, as well as the Maui energy resource levy (of 45c per Gigajoule of gas) which amounted to between $NZ35-40million a year.
"This report is a reminder to the government and to people of the importance of not only attracting new foreign investment, but of retaining existing industry. We need to keep what we already have," concluded Aitken.
