Contact buys five years of gas from new field

By CHRIS DANIELS energy writer

Contact Energy has signed up to buy the first shipment of natural gas from the new Pohokura field.

Austrian company OMV, a part-owner of the field, is selling its share of the first five years of production to Contact, which needs gas for its power stations in Taranaki and Otahuhu.

Gas from the field, which is off Taranaki and is jointly owned by OMV, Todd Energy and Shell, is expected to start flowing in 2006.

While not naming a price for the gas, Contact chief executive Steve Barrett said the payment structure was "a mix of a capacity fee based on the maximum daily entitlement, and a variable element based on the actual amount of gas lifted by Contact on any given day".

The Pohokura gas will be used to fuel existing power stations and is not enough for Contact yet to commit itself to any new electricity generation.

It has resource consents that allow it to build new power stations in Otahuhu and Taranaki, but without security of gas supply it will not build them.

Barrett said the new contract with OMV was broadly equivalent to the fuel needed for its Otahuhu B station, a 380-megawatt plant that can provide power to more than 300,000 homes.

Another power company desperate to sign up new gas contracts is the state-owned Genesis, which yesterday said it had agreed to buy New Zealand Oil & Gas' share of gas from the Kupe field.

Genesis owns 31 per cent of the field, NZOG 15 per cent.