Methanex New Zealand managing director Bruce Aitken said Monday's comments from Shell International Asia-Australia regional business director Tim Warren were self serving and probably inaccurate.
Warren had said gas prices would inevitably rise to the global norm of about $US3 per gigajoule as companies exploited the large and more expensive deepwater fields that held the key to the future of the future gas market.
Warren also said yesterday that the days of Methanex getting cheap Maui gas were numbered, with gas price increases a certainty once the Maui field was exhausted, possibly as early as 2007.
Aitken admitted gas for the Taranaki methanol plants would cost more in a post-Maui age, but he said there was no certainty about the size of those increases.
"Methanex has gas contracts in five different countries and each one is about the same or slightly cheaper than the Maui price. The idea of Maui being cheap is a myth."
Gas prices were largely determined by supply and demand. "The market will determine the future price, not explorers."
He said Warren's comments were "self serving'. While there were some encouraging comments, actions spoke louder than words, and Aitken said he looked forward to explorers, Shell in particular, making several more Pohokura-sized discoveries so the Methanex Taranaki plants could continue operating to 2010 and beyond.
Aitken also said it was unfortunate that an existing player, Shell, had last year bought Fletcher Challenge Energy and not a fresh player from within New Zealand or overseas.
Methanex' preference was to stay in Taranaki, but Aitken conceded the next two to three years would be critical. "The ideal scenario would be to have both plants in Australia and New Zealand operating in tandem, supplying the expanding Asia-Pacific methanol market."
Aitken also criticised the redetermination process for the remaining Maui gas reserves in the light of last year's news from Shell that the field could run out in mid-2007 and not 2009.
"The redetermination process is an ill defined, potentially tortuous path, which is set up to fail."
Methanex would be seeking an urgent but fair approach to how to re-allocate the remaining Maui reserves, if it was proved that only about 3800PJ of gas was ultimately recoverable and not the 4300PJ on which contracts were based.
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 the ceiling, which Methanex could pay in times of very strong methanol prices, was about $US2.
He said the New Zealand energy sector should be thinking about an expanding gas industry, not one that was shrinking.
By Neil Ritchie.
