Alarm bells sound over gas reserves

By RICHARD BRADDELL

New Zealand gas prices will rise and petrochemical plants will be forced to close if new gas reserves are not discovered before the Maui field starts running out in 2005, says the International Energy Agency.

Executive director Robert Priddle said there would be big consequences for New Zealand, including an increased reliance on coal for electricity generation.

Gas is more environmentally friendly than coal, which now accounts for 5 per cent of electricity generation, but could be an economical alternative to gas if required.

At present, there is little concern about a potential gas shortage. Both explorers and big consumers are confident new reserves will be found.

Last year, 18 exploratory wells were drilled, compared with five in 1999. The agency noted the industry comment that Government encouragement would result in more exploration in remote areas.

The agency suggested that the Government review its exploration policy and invite industry submissions to promote exploration of the Great South Basin.

The warnings were sounded in a four-yearly review of New Zealand, which was released yesterday.

Mr Priddle said the agency had been unable to confirm whether explorer and consumer confidence in new discoveries was well founded.

New Zealand exports 41 per cent of its coal production.

The agency said there was no reason for the Government to retain ownership of Solid Energy.