New Zealand to build LNG import facility for energy security
Simon Watts, New Zealand's Energy Minister, announced on Monday that the country has selected contractors to build a LNG import facility. This will boost energy security and provide a reliable backup source of power, as well as support economic growth.
By the middle of the year, the government hopes to sign a deal for an LNG import facility to be built in Taranaki on New Zealand's North Island. The facility will be ready in 2027, or even earlier in 2028.
The model allows LNG to be imported only in large quantities and when required, thus limiting the exposure to global gas prices.
Watts stated that despite a boom in renewable energy generation, mainly hydropower, the declining gas supply has left New Zealand’s power sector vulnerable during droughts, when water levels run low at lakes and dams.
Watts stated in a press release that the result of this is a greater reliance on coal and diesel and, ultimately, higher electricity prices. This puts more financial pressures on families, and makes businesses less competitive.
Establishing a LNG import facility is a crucial next step.
The Minister gave a cost indicative of around NZ$1billion ($600m) and an import capacity of 12 Petajoules per year.
How will this work? Who orders the goods, who aggregates and who supplies? This is unclear to me, and most others," said an individual familiar with the tendering process who declined to name themselves because the bids were confidential.
The centre-right government, elected in 2023, has tried to diversify energy sources. It passed a law in 2025 to allow offshore oil and natural gas exploration. This lifted a ban that had been imposed by the centre-left Labour government.
EnZed Energy is the only private company that has received exclusive rights for an offshore block.
Watts said that access to LNG would deliver an estimated NZ$1.2billion ($721.6m) in economic benefits annually by 2035, and protect around 2,000 job from the impact of rising gas prices and energy shortages.
Australia may not have enough cargoes to supply New Zealand with LNG, even though it is their closest neighbour across the Tasman. This is because southeastern Australia faces a "looming" gas shortage.
Canberra has finalised a review of the gas market that will ensure 15-25% gas from LNG export plants on Australia's east coast remains in Australia. Some companies have also considered plans to import LNG in order to fill the gap.
(source: Reuters)
