New Zealand will abandon its long-standing gas self-sufficiency and begin importing LNG from 2027, as the government races to prevent future energy shortages after years of declining domestic output.
The government has shortlisted six contractors and will award a contract by mid-2026, it said on 9 February, ahead of the completion of an LNG terminal, expected to be ready as early as mid-2027.
LNG will supplement dwindling supplies from New Zealand's Taranaki basin, where investment has stalled due to political disputes over the future of fossil fuels. Construction costs for the terminal are modelled at more than NZ$1bn ($600mn), with a levy on power consumption to be imposed.
Wellington says it cannot waste time in the face of an energy crisis, despite the costs. The country suffered soaring prices in 2024 when low hydroelectric inflows and cold weather drew attention to the worrying lack of back-up power.
Future dry years could cause long-term effects on the economy, the government said, adding that urgency is now required.
Last resort?
New Zealand utilities sponsored a report into options for LNG importation in 2025. It found that LNG imports are feasible and large-scale shipments offer the lowest cost of supply.
LNG is one of the most expensive fuels and more solar, wind and geothermal power should be partnered with coal and diesel peaking plants instead, say critics, including renewables lobby Rewiring Aotearoa.
But gas-fired generation is the best insurance against dry years due to its ability to back up renewables and cap the price of gas, which could soar again due to rapidly depleting fields, the government said.
New Zealand could take as little as 12PJ of gas or about 218,000t of LNG, which could help smooth electricity supply in the winter of a dry year, the government said.
The country's business, innovation and employment ministry (MBIE) prepared alternative options including biomass or coal-fired power plants, diesel-fired generation and new renewable projects, but none provided the speedy solution Wellington was seeking.
No takers
New Zealand is not a gas-poor country. Its relatively small population and industrial base, including methanol, metals refining and food manufacturing sectors, were reliant on Taranaki basin gas plants for many decades, with surplus supplies to firm the grid at times of low hydro inflows.
But a cratering of investment in the sector followed a 2018 decision by the previous Labour-led government to end the awarding of new exploration blocks outside of the onshore Taranaki basin.
Gas production fell on the year for the eighth consecutive quarter in July-September 2025, MBIE data show, with 2027 annual output predicted at just 95 PJ/yr, from 107 PJ/yr in 2025.
The "structural and significant" gas shortage is leading to increases in electricity prices, a leading energy executive warned in 2025.
Meanwhile, investment in electrification and new sources of energy, such as hydrogen, have failed to materialise, leading the National-led government to reverse the ban on exploration in 2025.
Importing LNG is de facto recognition that with broad opposition on the political left to increasing gas output, the country cannot expect any fresh investment in the sector, a point echoed by Australian independent Beach Energy, which is shifting its focus to Australian markets from New Zealand due to political uncertainty in the latter.
New Zealand's stance on gas has been noted across the Tasman Sea. Victoria state, a gas-hungry jurisdiction that banned onshore exploration last decade and continues to restrict unconventional gas production, has softened its language in recent years, wary of the enormous cost facing the state should supplies deplete.
With LNG imports considered increasingly likely, particularly if coal-fired generators are retired as expected, the role of gas in backing up New Zealand and Australia's vast renewable power capacity is becoming increasingly accepted by policymakers.
