Breakthrough Deal Extends Life of Maui Gas Field

Shell New Zealand today announced a breakthrough deal, which will help to ensure maximum recovery of gas from the Maui gas field. The announcement comes two days after the Maui field celebrated a quarter century of operation.

The Maui gas contract has been renegotiated to provide further incentives to develop remaining gas reserves in the Maui gas field. In return for guaranteeing 367PJs of gas at the existing Maui gas contract price, the Maui Joint Venture will be able to sell any additional volumes of gas at a market price. Of the additional volumes, 40PJ of gas will be reserved for Methanex.

“While final reserves figures for the incremental gas to be extracted are yet to be determined, there is no doubt that this deal will ensure the maximum economic recovery from the Maui gas field, extending its life beyond 2007 and contributing to New Zealand’s security of gas supply,” Shell New Zealand Exploration and Production Commercial Manager Ajit Bansal said

“The process entered into to reach this agreement has brought together seven parties: the three Maui Joint Venture companies (Shell, OMV, Todd), the Crown, and the three Maui gas buyers (NGC, Contact and Methanex). All parties have worked constructively for many months to deliver this deal and it is particularly encouraging to see the Crown and downstream players coming together in such a positive way,” Dr Bansal said.

Maui gas prices were fixed before the first oil crisis in 1973 and have been declining in real terms since that time. The overhang of Maui gas production and pricing at levels below the cost of gas replacement has been an impediment to further development of the field.

The deal announced today also paves the way to remove contractual impediments to allow third party gas access to the Maui pipeline in the near term.
The Maui field is jointly owned by Shell (83.75%), Todd (6.25%) and OMV (10%).