Motunui $3000M benefit to N.Z.

Press, 28 February 1986, Page 1

Motunui $3000M benefit to N.Z.

By

SIMON LOUISSON

at Motunui

New Zealand should still benefit to the tune of $3 billion over the life of the Synfuel petrol plant in spite of the drop in world oil prices, according to the company’s chairman, Dr Colin Maiden.

‘ The economics of the Motunui plant came under scrutiny from more than 75 journalists attending the opening ceremonies and news media conference in Taranaki yesterday.

The public affairs manager of the New Zealand Synthetic Fuels Cor-

poration, Mr Graeme Conell, denied that the expenses-paid invitation to the journalists, including 27 from overseas, was an attempt to sell the project to the public. He said that he “didn’t have a clue” how much the public relations exercise cost but that was the business of Synfuel. Guests from France, Austria, Australia, and Germany were paid for by the respective Mobil companies of each country.

Mr Read, of Mobil Australia, said it was not specifically to try to sell the pioneering Mobil tech-

nology in the plant, but to give journalists a chance to see the project Dr Maiden conceded that the economic benefits to New Zealand depend very much on oil prices over the life of the plant but he emphasised it was a long-term investment. He said that oil would have to fall to SUSII a barrel before the plant was uneconomic. Oil prices on the world spot market have fallen from SUS 27 to SUSIS in the last three months.

The Secretary for Energy, Mr Jack Chesterman, acknowledged that New Zealand could buy

petrol on the world market cheaper than it could be produced at Motunui. Dr Maiden said that Motunui petrol would cost between 40c and 50c to produce, with the costs being closer to 50c over the next year because of the “iumpiness” of the loan repayments. Operational expenses will be lie to 12c a litre and Mobil Oil, as the plant operator, will receive 27.8 c a litre.

Mr Paul Hoenmans, executive vice-president for the Mobil Oil Corporation, said that oil prices were weak and unstable. “It is not clear whether

the market has found its bottom, although the direction is clear enough,” he said.

Instability in oil prices met no-one’s goals and eventually a . consensus would eventuate which might see oil prices stabilise about SUS2O to SUS2S a barrel, he said.

Synfuel’s general manager, Mr Jim Beard, said it was Impractical to consider mothballing the plant and this had not been contemplated. The Government would get no benefit from the take-or-pay gas agreement and the loans for developing the plant, more than

SUSI2OO million, would still have to be paid. Virtually the only saving would be the 11c a litre production cost and in addition New Zealand would lose $5O million to $BO million of oil condensate, which is a by-pro-duct

Asked why other gasrich countries had not imitated New Zealand’s initiative, Mr Hoenmans said other gas-rich countries such as Norway and Britain had excellent reticulation. systems which made it more economic to use the gas in other ways. Official opening, page 3