"If this is true and someone like OMV takes over the government share, as well as some of Genesis' stake, and then appoints Shell Todd Oil Services as operator - I for one would be going to the Commerce Commission," one commentator told EnergyReview.Net today.

"That would be the worst case scenario for Kupe because I doubt Shell, which effectively controls STOS, would develop two fields together, which is what this country needs.

"If Kupe is not developed in tandem with, or soon after, Pohokura the electricity generators will still be looking for new gas and no new power stations will be built. This does not even take into account whether Methanex will still be here, wanting gas for at least one of its Taranaki methanol trains."

He was commenting on Bloomberg reports that the Crown is about to sell its 11% "free carry" interest in the Kupe field, this country's second largest undeveloped petroleum resource after the 500-600 bcf Pohokura gas field. Kupe is estimated to hold about 290 bcf of gas and 16 million barrels of liquids.

However, associate energy minister Harry Duynhoven denied that a sale of its "free carry" interest was imminent.

"We have had a number of discussions with several parties, both New Zealand and international groups, but nothing has yet been decided. The Crown may sell or it may decide to retain its share for a while.

"However, I am keen that ownership issues be resolved and that the Kupe field be developed to give more certainty to the gas market. Personally I would like arrangements to be concluded as quickly as possible, if that would see a fair value for the Crown."

The government's "free carry" is a relic from before Crown Minerals legislation, where the government took an 11% stake in an exploration licence at no cost to itself and only started contributing to costs if it decided to stay as a development partner.

Majority stakeholder Genesis Power last year said it was looking at farming out part of its 70% share to a firm or group, which would then take over as operator of the Kupe field.

A consortium headed by New Zealand Oil and Gas discovered Kupe off south Taranaki in 1986 but the field has lain undeveloped ever since, principally because of the marginal size of the reservoir and the dominance of low-priced Maui gas.

The last disclosed price for a stake in Kupe was $US19.6 million when Fletcher Challenge Energy bought a 34% interest in the mining licence in 1997.