Business 2000: High energy year painful at pumps

Petrol prices soared but so did investment in exploration, reports PAULA OLIVER. Share values also jumped amid a mega-deal.

The oil industry had a gusher of a year. Whatever way you look at it, surging oil prices, a major corporate sale and a big discovery in Taranaki ensured that 2000 will be remembered by everyone.

It was a year when Kiwis found filling up a painful experience, and a new term entered our vocabulary: petrol rage.

A flare-up in the Middle East and a stooping kiwi dollar combined to send the price of a litre of unleaded petrol soaring to $1.21 in September.

In scrambling to explain why petrol had to be so expensive, most of the country's oil companies earned their share of the public's wrath.

So did forecourt attendants - one of whom was run over by an abusive customer who found the cost of running his car too much to handle.

The intense pressure placed on global crude prices even forced the US Government to tap into its strategic oil reserves in a bid to ease the crisis and give Americans the chance to heat their homes in winter.

But just as young Kiwis started cycling to work, the crisis eased and the dollar began to strengthen.

Motorists enjoyed the industry's first real price war just before Christmas, when Shell aggressively launched a spot campaign slicing as much as 10c off its prices on a day.

BP and others invariably matched the prices, meaning motorists ended the year with a smile on their faces and the hope that the worst had passed.

While oil companies grappled with the public's backlash, Royal Dutch Shell grappled with the Commerce Commission over its eventually successful bid to buy Fletcher Energy.

The $4.3 billion transaction was one of New Zealand's largest ever, but it was not easy for either party.

After months of canvassing potential buyers as part of its exhausting separation process, Fletcher Challenge settled on a deal with Shell in October and told everyone so.

Unfortunately, the commission had other ideas, and when it halted the sale just days later, Energy's soaring share price was hit hard.

But it did not take long to recover after Shell made a second and successful bid to net the oil and gas giant in November. Although happy to have secured the deal, Shell bosses were not entirely satisfied with the requirement to sell some Energy assets, including the Maui gas field and Challenge! petrol stations, to satisfy competition concerns.

By the end of the year, Energy shareholders felt they had been through a wringer, but they emerged with smiles after a stellar share performance. Energy began the year at not much more than $4 a share, peaked at $9.36 after the sale was passed and ended the year on $8.55.

Also smiling at year-end were the Texas-based Swift family, who uncovered a potentially large oil and gas resource in Taranaki.

Terry Swift, the young, slick son of the founder of Swift Energy, told the upbeat 2000 Petroleum Conference in Christchurch of his find in March.

Swift later raised its exploration investment in NZ from $5.6 million for the year to more than $20 million, saying the discovery showed this part of the world held great potential.

It was not alone in thinking that - Crown Minerals revealed in June that a record number of wells would be drilled in the year, costing as much as $160 million.

Appraisal drilling on Swift's big Rimu find looked promising, and last month the company said it would sink more wells.

It could even begin offering natural gas for sale by March, after finding commercial quantities in Taranaki.

But amid the generally positive outlook, spare a thought for Britons, who felt the petrol crisis a little more than Kiwis did.

One man, who drove 50km to a petrol station because many had run dry, was told when he arrived that he could put only $15 worth of petrol in because of rationing.

Already paying the equivalent of $2.84 a litre because of huge fuel taxes, he blew his top at staff while defiantly pumping past the limit.

Herald Online features:

2000 - Year in review

2000 - Month by month

2000 - The obituaries