Oil Is Better Than Gas

The New Zealand's biggest gas distributor Natural Gas Corp will sell a gas retailing unit and power stations worth more than $280 million to focus on its pipelines business. The company, 66 percent owned by Australian Gas Light Co., said a marketing and billing arrangement with Genesis Power Ltd. means it no longer has a direct link with its 100,000 household gas customers. Natural Gas Corp. will continue to run the major gas pipelines on New Zealand's North Island. According to a broker with ASB Securities Ltd opinion It makes more sense for them to be an infrastructure company rather than a generator. They don't have customers on the electricity side of the business, so they don't have a natural hedge against wholesale price changes. Wellington-based Natural Gas Corp. has interests in three gas-fired power stations and a small hydroelectricity dam on the South Island. A year ago, it sold its electricity retail business, depriving it of customers for its power and forcing it to accept volatile wholesale electricity prices. At June 30, Natural Gas Corp. valued its power stations, which can produce about 12 percent of New Zealand's electricity. Government-owned Meridian Energy Ltd. owns plants that generate about 28 percent of the nation's power, while Contact Energy Ltd. produces about 25 percent. ©

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