Kapuni JV Calls for Redetermination of Field Reserves

Vector Limited has been notified by Todd Petroleum Mining Company Limited and Shell Petroleum Mining Limited ("Kapuni Mining Companies" or "KMCs") that under the Kapuni Gas Contract ("KGC") they require that the Original Recoverable Gas Reserves ("ORGR") be redetermined.

Vector's entitlements to the gas under the Kapuni Gas Contract (KGC) are based on an Original Recoverable Gas Reserve (ORGR) figure of 1,010PJ agreed under a contract redetermination in 1997. Vector has rights to take 50% of the remaining reserves as at April 1, 1997. The majority of this gas has already been taken so the redetermination will decide how much gas is left to take.

The mechanism under the KGC for either the KMCs or Vector to address any change to the ORGR and their subsequent entitlement to gas is to call for a redetermination of ORGR.

Vector has engaged an international expert to advise Vector on the ORGR of the Kapuni field from the data made available. There is a requirement that Vector and the KMCs meet to endeavour to agree the ORGR. That meeting will take place on February 3, 2010. If agreement cannot be reached, there is a process for reaching a binding determination of the ORGR.

Given the need for Vector and its experts to fully consider and evaluate the information received from the KMCs, Vector is not able at this stage to quantify the reserves position and the financial impact.

Vector expects that there will be no impact on the availability of gas to customers under their existing contractual arrangements with the company.

Vector continually manages its supply arrangements including seeking new gas supplies to augment and eventually replace the supply of gas from the Kapuni field as it is used up.

Kapuni is the oldest producing gas-condensate field in New Zealand, and this mature onshore field is surpassed in original size only by the offshore Maui field.