WELLINGTON -- - RPT-NZ power companies to investigate LNG imports

WELLINGTON -- A looming sharp fall in New Zealand's natural gas production has prompted the country's two biggest users to investigate importing liquefied natural gas (LNG). State-owned Genesis Power Ltd and Contact Energy Ltd , the two biggest power generators and energy retailers, said recently they would do a joint study on developing LNG as a solution for a potential shortfall in New Zealand gas supplies at the end of the decade.

"New Zealand faces the prospect of a primary energy 'gap' from around 2008-2010 due to the wind down of the Maui gas field, with only new small gas fields being developed, and continued demand growth," the companies said.

It was uncertain whether renewable energy sources such as wind and geothermal power, as well as any new gas fields, would be enough to fill the gap. The Maui field, which supplies around 80 percent of New Zealand's gas, is expected to be largely exhausted by 2007 and recent discoveries have been insufficient to make up the shortfall.

LNG COMPETITIVE said the only choices left to fill the gap were either coal or liquefied natural gas, with the latter likely to be preferred.

"As the two largest gas customers in our own right, Genesis and Contact are the logical parties to be progressing an LNG development."

Electricity produced from LNG would cost around the same as that from other sources and could be used in conjunction with supplies from smaller gas fields.

The two companies said they expected to complete their LNG study by the first quarter of next year. After the Maui field runs out, New Zealand gas supplies will be dependent on the yet to be developed Pohokura gas field and a host of separate small fields.

Pohokura, jointly owned and operated by Shell , Austrian explorer OMV and local firm Todd Petroleum, is estimated to have around 700 billion cubic feet of gas, and should be on stream by mid-2006.

Genesis also owns the majority of smaller undeveloped Kupe field, about one third the size of Pohokura, which should be producing in 2007.

The two fields have more than half of New Zealand's known gas reserves.

New Zealand is currently holding a new exploration licensing round in the key Taranaki region which contains all of the country's commercial gas and oil fields. Bidding for the 17 blocks -- eight onshore and nine offshore --closes at the end of October.

Indonesia, Malaysia, Australia and Brunei are the closest big LNG producers to New Zealand. A senior vice president of the Shell Group, the world's biggest private supplier of LNG, recently told Reuters that world usage, currently about 110 million tonnes a year, was expected to grow over the next 10 years by 70 to 100 million tonnes.