Govt gains from Maui deal

By RICHARD BRADDELL

The Government expects to get an extra $70 million in royalties from the Maui gas field after settling a long-standing dispute with licence-holders Fletcher Challenge Energy, Shell and Todd.

The agreement should boost royalty payments to $450 million by the time the last contracts on the field expire in 2009.

The dispute arose from vague terms in the 1973 Maui mining licence which set royalties at 5 per cent of the value of gas and condensate at the well head, but failed to say how to calculate that value.

The Ministry of Economic Development's deputy secretary of resources and networks, Mike Lear, said the Government took court action in 1988 but stopped in 1995 when the parties agreed to negotiate rather than use the arbitration provisions in the agreement.

The dispute was resolved by looking at similar contracts and copying the royalty scheme used for North Sea oil and gas.

He said the Government was pleased with the outcome.

The extra $70 million payment includes $15 million in arrears with the $450 million total based on the field's expected performance.