The Gas Industry Co has issued the latest update of The New Zealand Gas Story – the State and Performance of the New Zealand Gas Industry. The third edition of this publication can be found here.
Notable elements of the update are:
• The Report updates current statistics and other information from a variety of published sources. Due to the staggered nature of formal disclosures the Distribution section will be updated when all latest Distribution Network disclosures are to hand at the end of April.
• The Gas Pricing section incorporates extended discussion of the wholesale gas market with additional information flowing from the operation of the wholesale trading platform.
• A variety of recent reports have fed into extended discussion of gas supply and demand scenarios, and the opportunities and challenges they may present.
Overall, the Report notes that the gas industry continues to be in good health, although it faces some headwinds:
• The total market has grown on the back of a return to full three-train methanol production at Methanex.
• Increased petrochemical demand is offset by a continuing trend towards a gas ‘peaking’ role in electricity generation, with a resulting further reduction in gas use for baseload generation. At the same time broader retail market demand is relatively flat.
• Fall in international oil prices is inevitably affecting New Zealand upstream investment, especially because New Zealand exploration is targeted mainly at oil. Smaller explorers and producers are particularly affected. Oil prices will continue to change within the longer horizons of the New Zealand gas story, however, and new and large investors continue to be attracted to New Zealand through the block offers regime.
• An intensive exploration effort in the last few years has to date not yielded the significant new discoveries that many hoped for. But the domestic gas markets have seen a lift in reported reserves levels in the past year from further development of existing fields, and new figures on ‘contingent’ reserves from those fields signal significant further potential.
• Downstream, gas consumers continue to be well-served and customer numbers are growing. Consumers have a good and expanding choice of retailers with recent new entrants strengthening an already competitive market. And the emsTradepoint wholesale market is gaining traction, with increasing market participants and volumes traded.
• Existing gas infrastructure is expected to carry the industry forward in the foreseeable future, pending any future step change in the form of a major new discovery or a substantial new demand source.
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