Late last week Energy Minister Pete Hodgson admitted that the Independent Expert's final report on remaining recoverable Maui reserves was a setback for his government's Kyoto policies.

The Netherland Sewell and Associates final report said only approximately 370 Petajoules of gas, equivalent to about 18 months of this country's total gas usage, were left in the offshore Taranaki field, at the Maui contract price.

These dismal results prompted Contact Energy to announce an upgrading of its New Plymouth power station to again run on fuel oil. Genesis Power is likely to run its dual-fueled Huntly station more on coal than gas in coming years until its second planned Huntly station comes into operation in 2005-06.

Hodgson said fuels, such as coal and fuel oil, which would substitute for gas in some areas of electricity generation and industrial process during the next three to five years, would produce greater amounts of greenhouse gas emissions than the equivalent amount of gas.

"So if you want to talk about Kyoto we're going backwards right now and we will stay going backwards for probably two or three years, while we burn coal and fuel oil which... has a significantly higher CO2 content per unit of energy," the minister said.

Hodgson also predicted power prices rises of about 7-8% during the next few years.

"If the price of Maui gas were to double at the wellhead, and I don't think that's unreasonable when the economics of the other fields are taken into account, that translates roughly into a seven or eight percent increase in electricity costs."

However, he said the government was closely liaising with the energy industry over the anticipated decline of Maui. The field, which supplied about 80% of the country's gas needs, could be closed down as early as 2007 and the industry needed to know how to get through this transition period.

Hodgson said he had met Methanex representatives (which included Asia-Pacific vice-president Bruce Aitken) an international consultant, a gas producer and a group of gas consumers all last Thursday.

Aitken said he had told the minister of his company's point of view regarding Maui and was sure Hodgson had a good understanding of the issues facing the nation as it contemplated its post-Maui industrial age.