Genesis Energy is making no secrets in Govt circles that under new CEO Albert Brantley the SOE has no interest in remaining a player in the upstream gas market, and would willingly quit its 30% stake in the Kupe oil and gas field. Happily, this fits rather well with Energy and Resources Minister Gerry Brownlee’s enthusiasm for the suggestion in last year’s “Stepping Up” report on the oil and gas sector by sharebroker McDouall Stuart’s head of research, John Kidd. The problem is the Govt made a promise not to sell assets in its first term, and it seems both Brownlee and Genesis would gladly get on with a Kupe disposal sooner rather than later.

The political conundrum could be solved if Genesis initiates the desire to sell, since this should be no more controversial than when Meridian sold its investment in the Australian generator, Southern Hydro, under Helen Clark’s watch. A further sweetener could be to ensure the Govt continues to own 50% of the Kupe-based national oil and gas exploration company which would emerge, while the other half becomes an investment opportunity of the kind the Capital Markets Development Taskforce says is missing for ordinary investors in NZ.

- - -NOT A SUBSCRIBER? - - - - - - - - - - - - - - - - - - - - - - - - - - -

NZ’S LEADING INFORMATION SOURCE FOR ANALYSIS AND INTERPRETATION OF THE CRUCIAL ENERGY AND ENVIRONMENT ISSUES AHEAD.

NEW ZEALAND ENERGY & ENVIRONMENT BUSINESS WEEK
Powerful and up-to-date, it covers Emissions Trading Scheme, Climate Change & Carbon Trading, the Resource Management Act, the Kyoto Protocol, Energy Supply Security, Electricity Generation, Renewable Energy, Oil & Gas Exploration, Energy Efficiency, Water Management, Sustainability. Covers policy announcements, draft legislation, amendments to Acts and regulations. Also includes NZ Energy & Environment Weekly Digest. Published every Tuesday. 46 issues per year.

http://nzenergy-environment.co.nz/home/special-introductory-offer
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

The only hurdle then might be the market’s view of the purpose for such a company. Brownlee would want the 30% Kupe stake underpinning the creation of a new petroleum exploration and mining company of sufficient scale, and with Govt backing, to accelerate further commercial discoveries of oil and gas.

However, petroleum mining is an inherently high risk, high capital costs business. Is it the right thing for Mums and Dads to put their hard-won loot into? Brownlee is keen to capitalise on the political success and alignment with Govt economic strategy for accelerated economic growth which might support a spot of people’s capitalism before the 2011 election, after which at least partial privatisation of several SOEs will be on the agenda.

Brownlee is certainly right there is plenty of enthusiasm for adding metals and minerals to NZ’s agricultural commodity-dominated profile, and partial sale of other big SOEs would help deal with the public debt mountain which looms.

 Copyright © Media Information Ltd
NZ Energy & Environment Business Week