NGC Concludes Gas Agreements with Shell

NGC Holdings Limited has finalized agreements with Shell New Zealand to buy approximately 105 petajoules (PJ) of gas from the Pohokura and Kapuni fields.

The agreements include a settlement of a gas supply indemnity arrangement dating from 1992, initially with Fletcher Challenge Energy, and subsequently with Shell following its acquisition of Fletcher Challenge Energy in 2001. As previously reported, NGC had exercised an option under the indemnity to purchase up to 70PJ of gas from Shell, and the parties had been negotiating a detailed contract.

Under the agreements, NGC will purchase Pohokura gas in the period following commissioning of the field production facilities, expected to be in July 2006, until 2010. Purchases of Kapuni gas from Shell will be in the period 2005 to 2013.

The exact volume of Pohokura gas to be purchased by NGC will depend on the Pohokura joint venture obtaining a field mining permit, the start of post-commissioning production, the amount of gas actually produced and supply to higher priority customers. The amount of Kapuni gas purchased from Shell will depend on the level of Pohokura gas deliveries.

The gas purchase price under the agreements is commercially confidential. It includes commodity and nominated capacity charges and will be paid monthly on a price per gigajoule basis.

NGC Chief Executive Phil James said the agreements together represented an important and positive event for the Company and for the New Zealand gas industry. NGC was particularly happy to now have clarity around the delivery of gas under the indemnity agreement.

"While discussions around final delivery arrangements for remaining Maui gas reserves have yet to be completed, it has been very pleasing to work closely with Shell to resolve the historic indemnity issue and to facilitate the delivery of Pohokura gas to the market at the earliest possible time."

Mr. James added the agreements would strengthen NGC's ability to supply customers in the post-Maui period.