Contact Energy Limited has entered into a contract with OMV for the supply of natural gas from the Pohokura field from January 2026 to December 2032. The contract remains conditional upon the receipt of the consent of the Minister given under section 41B of the Crown Minerals Act 1991. The supplier forecast volume for the initial 12 months is ~3.5PJ, with forecast annual volume declining over the duration of the agreement.
The new supply contract will go towards supporting Contact's planned operation of its two gas peaking units at Stratford and gas supply to retail customers. Contact's current contracts for supply from the Maui and Pohokura gas fields expire in December of 2024 and 2025 respectively. With the underlying wholesale gas price up by over 50% since Contact's last long-term contracting process, pricing is materially higher resulting in an implied short-run marginal cost (gas and carbon) of more than $200/MWh for electricity generated through the Stratford peakers.
This is in addition to ~$50m per annum of fixed operating costs required to support the running of the peakers. As part of its strategy to lead the decarbonisation of New Zealand, Contact has a range of initiatives aimed at reducing reliance on its gas peakers. These include a 100MW grid-scale battery under construction at Glenbrook and two more in planning, as well as a range of mechanisms across commercial and industrial supply contracts and retail products to enable the management of peak electricity demand.