Shell International staff talked of the likely threefold increase in the price of natural gas and the reality that in the future only a few New Zealand projects would meet Royal Dutch Shell's stringent screening criteria.

While there was enthusiasm about the imminent resumption of offshore activity - albeit Pohokura field development, not wildcat exploration - there is continued scepticism about Shell's long-term intentions and involvement in this country's energy industry.

On Monday Shell International's Asia-Australasia regional business director Tim Warren said New Zealand was a good place to explore and Shell was committed to utilising its worldwide technical and financial strengths in the search for new gas fields to replace the aging Maui.

However, the next day Shell International's Asia-Australia regional business advisor, Pete Jeans, said that while New Zealand was ranked 4th in the Shell world for country risk, it only managed 17th in fiscal terms and 40th in terms of prospectivity.

Shell NZ chairman Lloyd Taylor later said this country now had to meet Shell's international criteria of 15-18% return on capital, 3% year-on-year production growth and 3% reductions in operating costs.

That meant the Pohokura project was going ahead, while the development of the marginal Maari field, south of Maui, remained questionable. Warren said Shell's International focus was now on large basins which had large potential.

GeoSphere director, Mac Beggs, however, said that "failed" prospects could still turn out to be surprise producers. Pohokura, first known as Glenda, had failed early screening tests, as had the prospects of Rimu and Goldie. All had since proved to be commercial finds.

Others disputed Warren's prediction that gas in New Zealand would have to rise to the "global norm" of $US3 per gigajoule. Some said the average Australian gas price was about $US1.40 and $US1.25 in Britain, while others said Warren's prediction of $US3 conveniently happened to match the exported price of LNG from Western Australia.

Shell Pohokura concept studies co-ordinator, Malcolm Beaumont, said another Pohokura South well should be drilled from April and deviated offshore from near the Methanex Motunui plant, while a drill ship was due in August to drill a well in the north of the field.

Pohokura was expected to last 10-20 years, with production rates from 70PJ-120PJ per annum.

Contact Energy chief executive, Stephen Barrett, said now was the time for explorers to hunting in earnest for more gas. "The future I upon us, the time to go is now, we cannot afford to wait. Explorers have to go and find the gas."

Methanex Corporation Asia-Pacific senior vice-president, Bruce Aitken, rebutted Shell suggestions of necessary 300% increase in the price of gas, while also criticising the present redetermination process of remaining Maui reserves.

The second Shell New Zealand divestment was also announced, with the surprise winner being Greymouth Petroleum, which will buy the entire Kaimiro field and a percentage of the Ngatoro field, both in onshore Taranaki.

With industry attention on the likely sales of the Maui, McKee and Mangahewa stakes to Todd Energy and/or Preussag Energie, Greymouth chairman Mark Dunphy and chief operating officer John Sturgess had been quietly negotiating with Shell NZ regarding the small Ngatoro and Kaimiro assets.

Greymouth is to buy Southern Petroleum Ohanga Ltd's stake in the Ngatoro oil field and Shell NZ's interests in the Kaimiro gas-condensate field.

Industry politics, the decline of Maui gas, higher future gas prices and the need for more exploration investment were the prominent issues at the 2002 New Zealand Petroleum Conference in Auckland this week.

Shell International staff talked of the likely threefold increase in the price of natural gas and the reality that in the future only a few New Zealand projects would meet Royal Dutch Shell's stringent screening criteria.

While there was enthusiasm about the imminent resumption of offshore activity - albeit Pohokura field development, not wildcat exploration - there is continued scepticism about Shell's long-term intentions and involvement in this country's energy industry.

On Monday Shell International's Asia-Australasia regional business director Tim Warren said New Zealand was a good place to explore and Shell was committed to utilising its worldwide technical and financial strengths in the search for new gas fields to replace the aging Maui.

However, the next day Shell International's Asia-Australia regional business advisor, Pete Jeans, said that while New Zealand was ranked 4th in the Shell world for country risk, it only managed 17th in fiscal terms and 40th in terms of prospectivity.

Shell NZ chairman Lloyd Taylor later said this country now had to meet Shell's international criteria of 15-18% return on capital, 3% year-on-year production growth and 3% reductions in operating costs.

That meant the Pohokura project was going ahead, while the development of the marginal Maari field, south of Maui, remained questionable. Warren said Shell's International focus was now on large basins which had large potential.

GeoSphere director, Mac Beggs, however, said that "failed" prospects could still turn out to be surprise producers. Pohokura, first known as Glenda, had failed early screening tests, as had the prospects of Rimu and Goldie. All had since proved to be commercial finds.

Others disputed Warren's prediction that gas in New Zealand would have to rise to the "global norm" of $US3 per gigajoule. Some said the average Australian gas price was about $US1.40 and $US1.25 in Britain, while others said Warren's prediction of $US3 conveniently happened to match the exported price of LNG from Western Australia.

Shell Pohokura concept studies co-ordinator, Malcolm Beaumont, said another Pohokura South well should be drilled from April and deviated offshore from near the Methanex Motunui plant, while a drill ship was due in August to drill a well in the north of the field.

Pohokura was expected to last 10-20 years, with production rates from 70PJ-120PJ per annum.

Contact Energy chief executive, Stephen Barrett, said now was the time for explorers to hunting in earnest for more gas. "The future I upon us, the time to go is now, we cannot afford to wait. Explorers have to go and find the gas."

Methanex Corporation Asia-Pacific senior vice-president, Bruce Aitken, rebutted Shell suggestions of necessary 300% increase in the price of gas, while also criticising the present redetermination process of remaining Maui reserves.

The second Shell New Zealand divestment was also announced, with the surprise winner being Greymouth Petroleum, which will buy the entire Kaimiro field and a percentage of the Ngatoro field, both in onshore Taranaki.

With industry attention on the likely sales of the Maui, McKee and Mangahewa stakes to Todd Energy and/or Preussag Energie, Greymouth chairman Mark Dunphy and chief operating officer John Sturgess had been quietly negotiating with Shell NZ regarding the small Ngatoro and Kaimiro assets.

Greymouth is to buy Southern Petroleum Ohanga Ltd's stake in the Ngatoro oil field and Shell NZ's interests in the Kaimiro gas-condensate field.

BY Neil Ritchie in Auckland.