Problems Arising from the Resale of Maui Gas

摘要

The paper follows an earlier paper by the author "The Legal Aspects of Gas Trading", 1994 New Zealand Petroleum Conference Proceedings, which identified the legal aspects of trading in Maui and other gas. One aspect was the extent to which the contract for resale of (Maui) gas is to be back to back with the reseller's gas purchase contract. The paper identifies the problems which may arise from the resale of Maui gas in this context by undertaking a risk analysis from the perspective of the reseller (Contact Energy Limited, Methanex New Zealand Limited or Natural Gas Corporation (NGC)) and the buyer (say an electricity utility, cogeneration venture or a gas utility) and finds that the risks associated with reserves and the market for Maui gas and the need to allocate those risks (and the extent to which it can be done by back to back contracts) show that there is a prospect of inefficient investment decision-making resulting in a misallocation of resources and/or high transaction costs. While the optimum solution would be a renegotiation of some aspects of the Maui Gas Sale and Purchase Contract and the contracts by the Crown for resale of Maui gas to Contact Energy, Methanex and NGC, one can see that this has its own problems.