VCT
08/12/2014 13:43
GENERAL
PRICE SENSITIVE
REL: 1343 HRS Vector Limited
GENERAL: VCT: Kapuni Field Gas Redetermination
Vector Gas Contracts Limited has been notified by Todd Petroleum Mining
Company Limited ("Todd") and Shell (Petroleum Mining) Company Limited
("Kapuni Mining Companies" or "KMCs") that under the Kapuni Gas Contract
("KGC") they require the parties to meet to redetermine the Original
Recoverable Gas Reserves ("ORGR").
Vector has rights to take 50% of the remaining gas reserves from the Kapuni
field as at 1 April 1997. The current ORGR, set by an agreed redetermination
in 1999, is 1010 PJ. Vector exhausted its share of the current ORGR in July
2013, and has been continuing to take Kapuni gas on the basis of a 2011
letter agreement with Todd and Shell that there are sufficient reserves to
supply Vector a further 36 PJ over 5 years. The parties are currently in the
process of resolving a dispute over the terms and price for that tranche of
gas. The 2011 letter preserved the right for either party to instigate a
redetermination of ORGR in accordance with the KGC.
The KMCs have proposed a revised ORGR of 1038.9 PJ. This is higher than the
current ORGR of 1010 PJ, but lower than the most recently published P50
reserves for the Kapuni field, of 1078 PJ as at 1 January 2014 (Energy in New
Zealand 2014, published by the Ministry of Business, Innovation and
Employment).
Vector has engaged an international expert to advise Vector on the ORGR of
the Kapuni field from the data made available. The KGC requires that Vector
and the KMCs meet to endeavour to agree the ORGR. The KMCs have requested
that meeting take place on or before 5 March 2015. If agreement cannot be
reached, there is a process in the KGC for reaching a binding determination
of the ORGR.
Given the need for Vector and its experts to fully consider and evaluate the
information received from the KMCs, Vector is not able to form a view on the
reserves position and therefore whether there is any material financial
impact.
Vector continually manages its supply arrangements including seeking new gas
supplies to augment and eventually replace the supply of gas from the Kapuni
field as it is used up.
ENDS
End CA:00258632 For:VCT Type:GENERAL Time:2014-12-08 13:43:28
