Kupe joint venture
The Kupe Joint Venture is an integral part of the Company's business and provides a diversified source of revenue.
Genesis Energy, through wholly owned subsidiaries, has a 46% interest in the Kupe Joint Venture, which owns the Kupe oil and gas field that lies in the offshore Taranaki basin.
Kupe is an integral part of the Company's business and provides a diversified source of revenue for the Company. Genesis Energy is an active participant in the Kupe Joint Venture which gives it an opportunity to influence and share in any development of the Kupe oil and gas field.
Kupe's assets comprise three wellheads, an unmanned offshore platform, a 30 km pipeline and subsea utilities umbilical cable to an onshore production station near Hawera, oil storage facilities at New Plymouth and an onshore gas pipeline. Kupe commenced commercial production in March 2010 and is an important part of New Zealand's energy infrastructure. It is expected to meet approximately 11% of New Zealand's annual gas demand and approximately 50% of New Zealand's anticipated LPG demand until 2025.
Reflecting its 46% interest in the Kupe Joint Venture, Genesis Energy receives 46% of the natural gas produced. It has also entered into long term contracts with the other joint venture partners to purchase the remainder of the current natural gas produced and has rights in respect of all future production of natural gas from the Kupe oil and gas field. Genesis Energy sells natural gas to its retail customers in the North Island or uses it for electricity generation at the Huntly Power Station. The Company also sells surplus natural gas on the wholesale natural gas market.
Genesis Energy receives revenue from the sale of its 46% share of oil from Kupe. In 2012, Kupe produced approximately 11% of New Zealand's total production of oil and condensate. Approximately 95% of the oil and condensate produced in New Zealand in 2012 was exported.
LPG is a secondary product of oil and gas production. Genesis Energy receives 46% of the LPG produced by Kupe which it sells to its customers.