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Westgate works overtime to create business

By Graeme Kennedy

Friday 28th March 2003

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Westgate Port Taranaki is diversifying and building its cargo mix to compensate for a sharp drop in its core petrochemical export trade as the mainstay Maui gasfield's death is forecast to come three years earlier than expected.

Maui's extinction will leave just three relatively small fields ­ McKee, Mangahewa and Kapuni ­ to provide gas for Methanex's Taranaki plants that separate methanol from oil, condensate and naptha.

Other sources, including Pohokura and Maari, are not due to come onstream until after Maui dies, threatening the future of Methanex as a processor.

"And there's not much happening between now and 2006," Westgate chief executive Roy Weaver said.

"The Maui rundown will impact heavily on our exports ­ and on all of Taranaki ­ and there is a need for a more pro-active drilling programme to prove the significant reserves that are there.

"The Taranaki Basin is under-explored and we must drill more holes ­ follow the Australian example where a US company is drilling 11 a year in the Carnarvon Basin. If we drill four we think we are doing extremely well.

"The danger is that Methanex might go. If New Zealand wants the basin explored more closely there has to be a place for the gas to be processed, so Methanex is a real asset to keep exploration going."

Westgate last year exported 2.5 million tonnes of methanol ­ half of total petrochemical liquids ­ which earned the port about a quarter of its $28.25 million revenues.

Mr Weaver said methanol exports were expected to fall to a million tonnes this year and would drop even further if no gas was available from other wells.

New Zealand's second-biggest export port after Tauranga with a 2001-2003 total of 5.64 million tonnes, Westgate was succeeding in getting growth through diversification strategies, he said.

Container movements, which were 6000 when Mr Weaver became chief executive in 2001 after leading an impressive turnaround at PrimePort Timaru, last year grew 300% to 23,500 and were on track to reach 45,000 for the 2002/03 year, driven by increased dairy export volumes.

Dairy products were 17% of the port's trade three years ago, doubled to 35% last year and were expected to reach 70% in the current term. Growth averaged 80% in the last 2002 quarter. Mr Weaver said Westgate had formed a close working alliance with Tranz Rail and Taranaki road transport operators to help generate traffic, which included a 40% increase in grain and fertiliser shipments and substantial growth in meat and logs.

The port had 150 calls in the past 12 months from major lines Maersk, MSC, P&O Nedlloyd and LauritzenCool.

Mr Weaver, a University of Canterbury civil engineering graduate and Massey MBA, came into the port business as Timaru harbour engineer in 1985 after working in New Zealand, the UK and Saudi Arabia on major port and coastal engineering projects.

He became human resources manager in 1988, operations manager and deputy CEO in 1992 and CEO in 1997 as the Asian economic crisis, a move to hubbing and reduced ship calls almost destroyed PrimePort.

"Timaru had a very tough time as Asian trade dropped 30%," he said. "The company was losing money heavily ­ it was on a knife-edge as the shareholding changed and the directors replaced."

PrimePort had been 100%-owned by local authorities but 28% was sold to a consortium of local investors including Mr Weaver and several senior staff.

"That was a turning point," he said. "We knew we couldn't do it alone so we developed relationships with the port users, the agents, and storage and transport operators to create a port community.

"Timaru had a lot of land that needed to be developed for cool, dry and liquid storage and we suddenly became flavour of the month with people who wanted to invest near the port."

The company worked with Tauranga and Taranaki to outsource all dredging, a move that saved Timaru $1 million a year, and it became the first port in the southern hemisphere to buy mobile cranes to compete with the major gateways for container traffic. Four regional ports last year handled 230,000 20ft-equivalent units (TEUs) with eight of the machines.

Mr Weaver attracted more shipping lines to Timaru, built the container trade and reported a profit less than three years after the changes.

He said he found Westgate in 2001 in a position similar to Timaru's following the withdrawal of several major shipping lines that were not getting the volumes to make calls viable.

Mr Weaver said regional ports, particularly Timaru, Bluff, Port Chalmers, Nelson, Napier and his own, were enjoying a resurgence.

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