They have also used the current low hydro lake levels and looming possible winter power crisis to highlight the importance of secure, flexible gas-fired electricity generation.

This morning, Contact Energy chief executive David Hunt and Genesis Energy chief executive Murray Jackson said planning and preparation for possible LNG importation was needed now – not when there was insufficient gas to keep factories and electricity generation facilities operating.

Hunt said the recent tightening of electricity supply, driven by low hydro lake levels, reinforced the need for secure and flexible gas-fired generation.

Overall, total hydro lake levels were only 70% of average and 51% of maximum – conditions very similar to those that occurred before the 1992 winter power crisis.

“Around a quarter of New Zealand’s total electricity is generated with natural gas and this is becoming increasingly important to New Zealand in balancing the natural fluctuations inherent in wind and hydro generation.

“New Zealand cannot afford to have this electricity generation capacity stranded without a secure and reliable fuel source,” said Hunt.

Jackson said a final decision on whether to proceed with the LNG importation proposal would be left as late as possible. However, planning and preparation was needed now – as was contingency planning to prevent a possible power crisis this winter.

“It is the preference of both companies for domestic natural gas to meet New Zealand’s demands and both Contact and Genesis have been actively searching for it,” said Jackson.

“However, New Zealanders need to know that we are committed to ensuring there is sufficient natural gas to keep our factories and our electricity plants running.”

Contact and Genesis last year commissioned Wellington-based economic consulting company LECG to examine the macro-economic impacts of importing 60 petajoules per annum of LNG – about 40% of New Zealand’s total gas usage.

LECG found this level of additional imports would add only about 1.1%, or $NZ400 million ($A346 million), to New Zealand’s total import bill – an impact similar to New Zealand’s total annual importation of cosmetics.

Rising international oil prices, declining domestic crude production and the depreciating New Zealand dollar meant the importation of oil and refined petroleum products was having a more adverse affect, of more than $3.6 billion per annum, on the country’s current account.

Earlier this month, Hunt told EnergyReview.net he believed LNG imports would not decimate domestic gas exploration or production and that if domestic gas was cheaper than LNG, it would “always find its way into the market.”