New Zealand has taken a significant step towards diversifying its energy sources, shortlisting contractors to build a liquefied natural gas (LNG) import facility. The project aims to boost energy security, provide a reliable backup power source, and support economic growth. Energy Minister Simon Watts announced the plan on Monday, stating that the government plans to sign a contract by the middle of this year for an import facility in Taranaki, on the country's North Island.
The facility is expected to be ready to receive LNG shipments in 2027 or early 2028. The model will allow for large shipments of LNG to be imported only when needed, limiting exposure to global gas prices. This approach aims to mitigate the impact of declining gas supplies and rising energy costs on the country's power sector.
Despite a boom in renewable electricity generation, mostly hydropower, New Zealand's power sector remains vulnerable during droughts when water levels at lakes and dams run low. 2 billion annually by 2035 and help protect around 2,000 jobs from the impact of rising energy prices and gas shortages. However, the tender process for the project is still unclear, with many questions remaining about how the facility will be operated and who will order the LNG cargoes.
The centre-right government has sought to diversify energy sources, passing a law in 2025 to reopen the country for offshore oil and gas exploration. So far, only one company, EnZed Energy, has been awarded exclusive rights to an offshore block. Australia is the closest potential LNG supplier to New Zealand, but its exporters might not have many cargoes available due to a looming gas shortage in southeastern Australia.
The establishment of an LNG import facility in New Zealand will require careful planning and coordination to ensure that it operates efficiently and effectively. The government must address the uncertainties surrounding the tender process, including who will order the LNG cargoes and how they will be aggregated, to avoid any potential disruptions or costs.
