New Zealand aims to begin imports of LNG from winter 2027, after the country's National Party-led government announced it would begin a procurement process next week for an import terminal.
Recent dry years affecting hydroelectric output and declining gas production meant it was critical that firming energy sources were identified, the government said, with Wellington citing a review by consultancy Frontier Economics that found the market has failed to invest in adequate back-up fuel and generation.
"When we have dry years, like what we experienced in 2024, it can take the economy up to 25 years to recover from inflated electricity prices," energy minister Simon Watts said on 1 October.
Gas supply was just 115.7PJ (3.1bn m³) last year, data from the business, innovation and employment ministry show, 21pc or 29.04PJ lower than in 2023 due mainly to natural field decline.
LNG imports are feasible but costs for consumers are estimated at NZ$170-210mn/yr ($99-122mn/yr) including a landed gas price of $10.12-10.37/mmBtu, according to a July report sponsored by a group of New Zealand utilities.
But state-controlled utilities and retailers Genesis, Mercury and Meridian, of which Wellington controls 51pc stakes in each, may receive funding for additional power plants, finance minister Nicola Willis said on 1 October, indicating state support for capital raises.
The centre-right government has promised to hasten renewable energy projects, by quickening approvals processes and enabling offshore renewables to be built. It also wants to double geothermal take-up to increase renewable capacity.
The review comes after industrial users cut production last year due to the energy shortfall, with the two 900,000 t/yr methanol facilities in Motunui, operated by Canadian producer Methanex, idling plants on gas supply constraints, while Rio Tinto's 335,000 t/yr Tiwai Point aluminium smelter also reduced its output in July-September.
