03-04-01 Shell Group sold part of its stake in New Zealand's untapped Kupe gas field to Genesis Power for an undisclosed price. Shell acquired a 37 % interest in the field off the west coast of the North Island when it bought Fletcher Challenge's energy division last month for $ 1.67 bn. The field, which may contain 16 mm barrels of oil and 264 bn cf of gas, is the nation's second-largest undeveloped gas field after the Pohokura field also off the same Taranaki coast.
Genesis, a government-owned electricity generator, acquired 14.3 % of Kupe from Shell, boosting its stake in the field to 40.3 %. It wants the gas to fuel a 400 MW power plant that it plans to build at its Huntly thermal power station.
"After Methanex we are the largest gas user in New Zealand," Genesis CEO Murray Jackson said. "Our fuel use is 40 petajoules a year and that will rise to 60 petajoules with the Huntly expansion."

New Zealand uses about 205 PetaJoules of gas a year, most of which comes from the Maui field, which is expected to run down from about 2005. A string of new gas-fired power stations is creating new demand for gas, and Shell's Pohokura field isn't expected to be producing until 2004. Kupe, about a third the size of Pohokura, contains about 350 petajoules of gas.
As a condition of its Fletcher Challenge purchase, New Zealand's antitrust Commerce Commission required Shell to sell many of its smaller oil and gas holdings in New Zealand, including all its Kupe interest. The Commission had also taken court action over the way Fletcher Challenge and Genesis' predecessor, Electricity Corp., acquired their holdings in Kupe. Commission spokesman Vince Cholewa said that action is being reviewed in the wake of the Fletcher Energy sale.
Jackson said Shell's remaining Kupe stake will probably be sold to a new operator of the field, though Genesis would be interested in buying a 10 % stake held by Shoseki Oil Development. Genesis already holds gas entitlements from Contact Energy, and last year signed a nine-year agreement to buy 91 petajoules of gas from Natural Gas, the New Zealand unit of Australian Gas Light. It also had a 17-year contract with Fletcher Energy to buy 320 PetaJoules of gas.

Jackson said the company wants to arrange a portfolio of long- term gas contracts and has also been talking to Houston-based Swift Energy about a gas supply from its Rimu field in Taranaki.