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Contact Agrees To Acquire Pohokura Gas From OMV

Contact Agrees To Acquire Pohokura Gas From OMV

Contact Energy announced today that it has reached an understanding with OMV New Zealand on the terms of a gas supply arrangement from the Pohokura gas field. OMV New Zealand is one of the three joint venture partners in the Pohokura gas field. OMV New Zealand is a wholly owned subsidiary of OMV Aktiengesellschaft, Austria’s largest listed company and one of the leading oil and gas groups in Central and Eastern Europe carrying out worldwide exploration and production activities.

In early April, OMV New Zealand offered an initial tranche of gas from the Pohokura field to prospective buyers. The volume of gas offered was up to OMV New Zealand’s share of production from the Pohokura field for a period of five years commencing from the field’s first production date. This is expected to be around 30 June 2006.

Under the terms of the arrangements announced today, Contact will purchase the entire initial tranche of gas from OMV.

While Contact is unable to disclose the price for commercial reasons, the payment structure is 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.

This structure reflects the seller’s desire to have a high degree of revenue certainty before committing the substantial investment necessary for field development, and the physical characteristics of the gas reservoir.

“Today’s announcement is an important milestone for the company and the industry” said Contact’s Chief Executive, Mr Stephen Barrett.

““By committing to this agreement, we are taking a major step forward to securing New Zealand’s energy future during the remainder of this decade and beyond” said Mr Barrett.

“The volume of gas covered by the arrangement is broadly equivalent to the fuel requirement of our Otahuhu B power station, which can provide power to over 300,000 homes.” “Together with our existing supply arrangements from the Maui and TAW fields, this agreement provides us with increased fuel security in the short to medium term.”

“As a company, we are still keen to secure additional gas supplies to meet our business needs, and also to underpin new investment in gas-fired generation. For these reasons, Contact remains committed to initiatives such as the drilling fund sponsored jointly with Mighty River Power, and the study into New Zealand’s long term fuel options.”

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