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Salient. Victoria University Student Newspaper. Volume 38, Number 25. 2nd October 1975

Nationalise Maui and Kapuni gas

Nationalise Maui and Kapuni gas

The background to the discovery and exploitation of Maui and Kapuni gas hinges on the collusion between local and foreign monopoly capital. Oil exploration first got off the ground in New Zealand when Bryan Todd of the Todd group of companies bought out a number of exploration licenses in 1954. Todd's oil marketing company. Europa (60% owned by BP since 1972), has always lacked its own supply of oil and if oil was to be found in New Zealand more independence from overseas suppliers could be achieved.

Photo of Kapuni Complex with a mountain in the background

The Kapuni Complex

Todd s were new to the oil exploration game and lacked any experience or expertise in the field So they asked first Shell and then BP to come in as partners. In the Shell, BP, Todd, consortium that arose in 1955 Shell and BP each owned 37½% of the shares leaving Todds as the minority partner.

Using the expertise of the foreign monopolies the Kapuni field was discovered in January 1959. Shell, BP, Todd demanded that Kapuni gas be used to fire electricity generation stations — this use would have given the quickest return to the consortium but it was also the most inefficient of the possible uses of the gas. The government disagreed and pipelined it over the North Island as a premium fuel for industrial and domestic use. There were many delays over the pipeline and Kapuni gas was not stream until the 1970s.

The Kapuni field has proved larger than expected but with the acceleration programme' it is expected to last only a bit more than 20 years.

Photo of a drilling platform at work in Maui gas field

Drilling platform at work in Maui gas field

• In 1965 the Government opened up the continental shelf off the NZ coast to oil exploration and again Shell, BP. Todd were among the first prospectors buying the concession that now contains the Maui field.

Drilling in 1969-70 indicated a sizeable field of gas and condensate. The field was clearly profitable and in 1970 negotiations were started with the then government as to conditions of sale. The negotiations dragged on until after the change of government and on April 3, 1973 the Labour Government announced that an agreement had been made which involved the government in buying a 50% share of the Shell. BP, Todd consortium for $30,000,000 while guaranteeing price levels and tax concessions. The gas was to be used for electricity generation in gas-fired power stations while the Kapuni field was to have an 'acceleration programme' involving the drilling of about six new wells and using Kapuni gas to power the New Plymouth power station until Maui came on stream The agreement looked like a victory for state involvement in the oil industry — instead it was a victory for the oil companies.

By getting agreement to use Maui gas on electricity generation coupled with the Kapuni acceleration programme the oil companies are ensured the quickest possible return on their investment in Maui and Kapuni. (With its planned rate of use the Maui field is expected to run dry in about 30 years)' Other markets considered for the gas were smaller and less developed but because of the demands of the oil consortium for the quick use of the Maui field alternative uses for Maui gas were not properly explored Certainly the alternatives were not looked at in terms of their benefit to the NZ economy as a whole.

The chance to use our own resource to build up our own economic independence was lost. Gas was substituted for an equally inefficient fuel in electricity generation: oil. Although this means we make a saving in foreign exchange it is only a stop gap measure — it gives no idea as to how the power stations will be fueled when Maui runs out — will they go back to oil use?

The net effect of government involvement in the Maui field is to help finance the risky business of oil exploration as well as solving problems of finance for the exploitation of the field, and guaranteeing a market for the gas and condensate. Government is now committed to spending nearly S900 million on pipelines and power stations to transmit and use the gas.

All this has happened because the large monopoly interests in Shell, BP, Todd want a quick buck out of the deal The government has been prepared to give in to this attitude and sell our only major oil/gas resource down the river.

What is needed is the nationalisation of the Maui and Kapuni ventures and the exploration of alternative uses of a longer-term nature involving real benefit to the New Zealand people. Some alternatives have already been suggested by environmental groups. At the moment, the government is prepared to spend $30,000,000 $30,000,000 on developing the Maui field and $900,000,000 to create a market for the gas solely to guarantee profits for monopoly capital.