Stone told the NGC Winter Lecture Series – this year entitled the Role of the State in the Energy Sector – that further government incentives to increase local oil and gas exploration activity would be a small price to pay to prevent a possible NZ$8 billion foreign exchange bill.

He told EnergyReview.net that his previously held worst case scenario – of continuing declining domestic oil and gas production in the face of world oil priced at US$60 per barrel or higher – now looked likely unless there was urgent action aimed at more domestic discoveries.

The country's liquids self-sufficiency was now less than 20%, with 75% of domestic oil coming from the rapidly dwindling Maui field. Gas self-sufficiency was also declining and would continue to do so even with the Pohokura and Kupe fields coming onstream.

New Zealand’s bill for imported oil in 2003 was only about NZ$2 billion, when world oil was priced at US$30-35 per barrel and indigenous self sufficiency was greater.

And any decision to import LNG would lock New Zealand into imported gas for 30 years and dictate domestic gas prices, according to Stone.

“Just as cheap Maui gas dictated our market for 30 years, so would LNG,” he told ERN.

Stone encouraged the government to objectively look again at what it could do to foster oil and gas exploration, based on the reality of what was happening in the world, not on any particular party belief.

And Energy Minister Trevor Mallard told the lecture series that it would be good if New Zealand was able to defer the need to import LNG for as long as possible, by finding more domestic gas.

But Shell New Zealand chairman Paul Zealand predicted LNG importation would be part of New Zealand’s answer to secure fuel and energy supply in the long term.