Prime Minister says that the economics of New Zealand’s LNG terminal must be solid to give it approval.

New Zealand's plans to build a terminal for liquefied gas imports are in doubt. Prime Minister Christopher Luxon said on Monday that the government would only approve the project "if the business case was strong".

The?government?selected contractors in February to build the facility at Taranaki on the North Island of the country. The terminal was to be ready for LNG by 2027 or 2028. The project was announced by the government in 2025 as a way to improve energy security for the country and reduce costs.

Luxon said to Radio New Zealand on Monday that while the government is still at the procurement stage, and there have been many bidders for the project, if they don't think the business case makes sense, then they won't sign off?on it.

Luxon stated that "it's going to be purely a matter of 'economic return' and 'cost-benefit', as well as in the commercial case. If it is not a commercially attractive case, then we will not do it." The New Zealand Herald reported earlier Monday that the government was planning to delay or cancel the plan for the construction of the facility because?rising oil prices, caused by the Middle East war, had altered the economics. New Zealand is 'exploring the development of the facility as it leaves the power system vulnerable in dry years when low lake levels and dams limit 'hydro generation. The model proposed would allow New Zealand to import LNG only when necessary, in order to reduce the country's reliance on coal or diesel during shortages and limit its exposure to volatile gas prices. Simon Watts, Energy Minister of New Zealand, has estimated the cost as approximately NZ$1billion ($600m), with an import capacity 12 petajoules per year. (Reporting and editing by Jonathan Oatis; Lucy Craymer)

(source: Reuters)