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Increased Competition Good For Gas Industry Future

Fletcher Challenge Energy supports the call by Todd Energy for greater regulation of the gas pipeline companies, as it will help to secure the industry's future.

Fletcher Challenge Energy's New Zealand Chief Operating Officer, Dr Lloyd Taylor, said further regulation of the pipeline businesses is required to achieve greater competition in gas wholesaling and retailing.

"A more competitive market would not only bring gains for wholesale and retail customers but would be good for the future of the industry as a whole. Without a competitive and open environment the incentive for gas exploration risk capital investment, necessary to discover new gas reserves, is absent," Dr Taylor said.

Fletcher Challenge Energy supports the separation of pipeline ownership from other business activities, including trading activities and gas distribution. This would increase transparency of pipeline operations, reduce incentives for gaming by pipeline owners, and lead to an increase in competition in gas wholesaling and retailing.

However, Dr Taylor said that Fletcher Challenge Energy was not convinced that pricing regulation was the optimal solution in the New Zealand environment.

"We are open-minded on this aspect of regulation but believe that ultimately the clear separation of pipeline ownership from other gas business activities is the primary pre-requisite for a competitive gas industry."

Fletcher Challenge Energy is the country's leading oil and gas producer whose participation in the gas transmission market is limited to its part ownership of the Maui pipeline through the Maui joint venture. The company supplies some 80 per cent of New Zealand's gas and 40 per cent of total hydrocarbons.

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