Shell happy with Pohokura ruling

Shell New Zealand chairman Lloyd Taylor has moved to calm troubled waters in the wake of the conditional Commerce Commission approval of joint Pohokura gas marketing and subsequent media reports.
Shell happy with Pohokura ruling Shell happy with Pohokura ruling Shell happy with Pohokura ruling Shell happy with Pohokura ruling Shell happy with Pohokura ruling

"We asked for approval, promising development by 2006, and we have an approval, albeit with conditions which I do not think are unreasonable," Taylor told EnergyReview.Net today.

He agreed that the partners - Shell, Todd Energy and OMV - had not got the unconditional approval sought but admitted they had all they needed to proceed with the development of the possible 1tcf sized Pohokura gas-condensate field off north Taranaki.

Shell rejected The Independent newspaper's claim that the commission decision had thrown the Pohokura development timetable into "complete disarray".

"The commission's approval of the application to jointly market gas is a positive step towards delivery of the project which, as noted in the application to the commission, targets first gas in 2006. This has always been the basis of joint venture planning, engineering work and schedule," Taylor said.

The Independent article quoted a "senior Pohokura joint venture executive" as saying the partners were most concerned about the June 2006 development deadline imposed by the commission.

"Shell shares no such concern. We have the financing in place and are ready, pending some final testing, to make a final investment decision in the first half of 2004, as per our original timetable.

"The Pohokura joint venture protocols are in place to mitigate this sort of situation. We are all in this together and have to move away from a confrontational, adversarial approach, even if we disagree with some rulings or what other partners may think, and work for the common good," Taylor told ERN.

"The "executive" quoted in the Independent article implied that project financing was being sought for the totality of the project, but that was not the case. Shell intended to equity finance its 48% share of the project and was committed to the schedule put forward in the application to the commission.

"I cannot, and do not speak for other Pohokura partners, but from Shell's perspective, Pohokura is still on track. The alarmist claims made in today's Independent are unhelpful, and do not square with Shell's reading of the situation," Taylor added.

The commission on Monday authorised the three potential competitors to work together to jointly market and sell Pohokura gas, but imposed three conditions - that the partners only jointly market and sell gas after June 2006 if the Pohokura field is fully operational; that the commission clear any sale of any interest in the field: and that the partners allow reselling of gas to third parties.

However, the joint venture parties then said they believed that decision was wrong and that the attaching of significant conditions might delay development of the Pohokura project. The rulings set an unfortunate precedent for gas production and sale to the detriment of New Zealand's already difficult energy supply situation.

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