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Disclaimer: The information on this web site is issued by the New Zealand Debt Management Office (NZDMO) for informational purposes. It does not contain and is not an invitation or offer to buy or sell securities. Each page on this web site must be read in conjunction with the disclaimer at http://www.nzdmo.govt.nz.
Energy and Minerals
New Zealand has significant natural energy resources, with good reserves of coal, natural gas and oil/condensate, extensive geothermal fields, and a geography and climate which have supported substantial hydro-electric development. The main minerals mined, in addition to coal, are gold, silver, ironsands, various industrial minerals and gravel for construction. New Zealand is able to meet a significant proportion of its overall energy requirements.
Natural Gas: Natural gas is currently produced in the Taranaki region of the North Island from the large offshore Maui field, and smaller onshore fields. There are three main uses for gas in New Zealand; electricity generation, petrochemicals and reticulation. Gross natural gas production was 182,500 terajoules in the year to June 2008. Natural gas production declined sharply after the Maui field peaked in 2001, before stabilising through to early 2007. Production has since increased with the continued development of new, smaller and more diverse fields. The offshore Kupe oil and gas field is expected to provide 15% of New Zealand's gas requirements when it comes on-stream in 2009.
Oil: New Zealand's crude oil production was 2,419,000 tonnes in the year ended 31 March 2008 (an increase of almost 300% over the previous year), of which 89% was exported. Crude petroleum production has been increasing since the latter half of 2006 when the Taranaki inshore Pohukara field commenced production. The Tui Area Oil Field, located in the offshore Taranaki basin, commenced commercial production in the middle of 2007. New Zealand's production of crude oil is expected to be further boosted later this year as Maari, a new field located off the Taranaki coast, starts producing its first oil. The Maari field is expected to reach full production in early 2009, around the same time that production from the Tui Field begins to decline.
Coal: Coal is New Zealand's most abundant energy resource with total in-ground resources estimated at about 15 billion tonnes. Of this, 8.6 billion tonnes is judged to be economically recoverable from 42 coalfields. Of this amount, 80% is relatively low-grade lignite, 15% is middle-grade sub-bituminous, and the remaining 5% is bituminous. Lignite is used mainly for industrial fuel and sub-bituminous coal for industrial fuel, steel manufacture, electricity generation and domestic heating. Bituminous coal, which is typically very low ash, low sulphur coking coal, is mainly exported for metallurgical applications.
In the year to June 2008, total coal production was 5.0 million tonnes, of which approximately 2.2 million tonnes of bituminous coal were exported. Over the past year, the Stockton mine has had limited output but greater production is expected over the second half of 2008 and throughout 2009. The new Pike River coal mine began production in October 2008. Production is expected to increase steadily, with annual production forecast to be 1,000,000 tonnes for the year ending June 2010.
Electricity: In 1994, the government commenced a process for the restructuring of the state-owned electricity sector to promote greater economic efficiency in the electricity generation, distribution and retail industries. As a result, the transmission and generation functions of the former SOE, the Electricity Corporation of New Zealand (ECNZ), were separated, with a new SOE, Transpower, undertaking the transmission functions.
The generation assets of ECNZ have since been further separated, with approximately a third being privatised and now operating as Contact Energy, and the remainder being split into three competing SOEs; Meridian Energy, Genesis Power and Mighty River Power.
During 2003, the government established an Electricity Commission to govern the electricity industry. This was triggered by the failure of the electricity industry to establish a self-governance regime as originally envisaged by the Government. Government regulations and rules have replaced the previous trading arrangement. Regulation-making powers are also available in the Electricity Act 1992 (as amended in 2001) covering a broad range of other industry issues such as transmission pricing and investment.
Power from renewable resources (hydro and wind generation) accounted for around 60% of total electricity production in 2007 with thermal and geothermal generation making up the remainder.