Methanex NZ managing director Harvey Weake today confirmed industry speculation that Methanex would sign more expensive non-Maui gas supply contracts to keep its Taranaki operations producing at least 500,000 tonnes of methanol for 2004.

However, Weake would not confirm industry rumours that Methanex would be paying about $NZ5-6 per Gigajoule for 2004 for gas from the Todd Energy-owned McKee and Mangahewa fields, as well as some carbon dioxide-rich Kapuni gas from NGC for part of next year.

"Negotiations were successfully concluded earlier this month for the supply of sufficient gas to enable us to manufacture at least half a million tonnes of methanol, perhaps as much as a million tonnes, next year," Weake told EnergyReview.Net from Auckland today.

"Such details as price and the party or parties involved are commercially sensitive, although I can say that this is only part of the equation and we are continuing working on other initiatives that should, hopefully, see us operating in New Zealand in a post-Maui environment.

"We are trying to work towards a win-win situation for beyond Maui, one that would benefit all parties, though that does depend on the willingness of all concerned," he added.

Weake said he was encouraged by recent comments from departing Shell NZ EP managing director Lloyd Taylor that 100 PJ or more of Maui gas could be tapped by further drilling, though those additional reserves would only be economic to develop at prices greater than those specified in the Maui contract.

"It's in everyone's interest to see Maui further developed and the market will set the price players are prepared to pay for that additional gas," Weake said.

The Methanex contracts with Todd Energy and NGC - for the supply of about 14PJ of gas a year - expire either this month or early next year and it is known Methanex is desperate to keep its Taranaki plants operating, even at partial capacity, until expansions at its low-cost Trinidad and Chile production hubs are completed in 2004-05.

Next month the Maui partners - Shell, Todd and OMV Petroleum - the government and Methanex, NGC and Contact Energy are set to resume talks on the reallocation of remaining contracted supplies.

It is also understood the same parties are involved in negotiations regarding further exploration within Maui and the likely associated gas prices.