Struggle over scraps of Maui

By CHRIS DANIELS energy writer

Cracks are starting to appear in the delicate process of determining who gets the remaining scraps from the depleting Maui gas field.

Methanol maker Methanex will apply to the High Court in Wellington next week for an injunction, in an attempt to get more information about how much gas is left in the once mighty Maui field.

The court action was revealed yesterday when Natural Gas Corporation (NGC), one of the big buyers of Maui gas, said it did not support Methanex's assertion that insufficient data on the gas field was being made available.

Ownership of the gas reserves is now being "redetermined"-essentially a fresh carving-up of the field using seismic information about the amount of gas left.

The process was triggered by the revelation last year that the field is expected to run dry in 2007, not 2009 as first thought.

Gas supplies to the home and business market are assured well into the future, but big users are now trying to agree on how best to use the last of Maui, which has provided some of the world's cheapest natural gas for more than 20 years.

The different requirements of the big gas users have been looming as a potential source of conflict in the redetermination process.

Contact Energy, for example, uses Maui gas to power its thermal power station in Otahuhu and needs long-term arrangements for supply to keep it going.

But Methanex needs as much gas as possible straightaway to keep its Taranaki methanol plant running at capacity.

Another complicating factor is the existence of the "take or pay" gas contracts arranged when Maui gas first came to market more than 20 years ago.

NGC, for instance, has paid for, but not taken, gas from the field. That means it will want the redetermination process to guarantee that it can take delivery of the pre-paid gas before the field runs dry.

Included in the list of contingent liabilities in NGC's latest annual report is the arrangement between NGC and Methanex for 25 petajoules of gas, which it must deliver by 2006.

"In the unlikely event that the Crown is unable to deliver these gas entitlements to Methanex, because of a failure of the Maui field, NGC must make its best endeavours to deliver sufficient gas to meet its remaining obligations," it says.

NGC says it is satisfied it has enough information to "develop an informed assessment of the reserves", and will try to keep the redetermination process going.

Bruce Aitken, managing director of Methanex, said: "It's an issue of contractual obligations and whether parties have complied with terms of contract and the evidence will determine whether that's the case."



Methanex uses 44 per cent of all gas consumed in the country. It exports methanol worth about $800 million a year and employs 220 people in Taranaki.

Maui is 87.5 per cent owned by Shell Group and 12.5 per cent by private investor Todd Petroleum Mining Co. It sells gas to the Crown, which then sells it to NGC, Contact and Methanex.

A spokesman for Associate Energy Minister Paul Swain said the Crown would oppose court action.