Simeon Brown says LNG terminal remains ‘critically important’ after Methanex announces end to NZ operations
Energy Minister Simeon Brown says the construction of a liquefied natural gas import terminal remains “critically important” for New Zealand despite the country’s largest gas user planning to wind down operations.
Yesterday, Taranaki-based company Methanex announced it will sell its remaining contractual New Zealand natural gas entitlements through to 2029 and “indefinitely idle” its Taranaki plant next year after 40 years of operation.
The company said its New Zealand operations had grown increasingly untenable due to the ongoing decline in domestic gas availability and uncertainty over progress towards securing new supply.
Appearing on Ryan Bridge TODAY, Brown said Methanex’s closure was “another step in the unfortunate decline of oil and gas in New Zealand”.
He said Methanex had provided flexibility to the energy market during dry winters by diverting gas to electricity generation and supporting the security of supply, so the closure would have a “big impact” on New Zealand’s energy resilience.
“The LNG [liquefied natural gas] importation terminal will provide some optionality,” he said.
“The primary purpose of the LNG importation terminal is to ensure that during a dry winter, we’re able to access gas to be able to keep the lights on, keep electricity generation going and meet that need.”
Methanex consumes about 37% of New Zealand’s gas production, employs about 160 people and directly contributes to almost 10% of Taranaki’s economy, with flow-on effects across the wider region.
It’s also the largest purchaser of gas from Taranaki’s Māui gas field, whose operator OMV New Zealand formally notified the Government and regulators in April that it would cease production by the year’s end.
Brown said the terminal would provide more flexibility to gentailers, who currently have to either divert gas from other businesses or allow energy prices to skyrocket.
“So that’s why the LNG importation terminal becomes critically important.”
He said the Government’s most recent advice had placed Māui’s closure at “sometime next year”.
“With Māui being a key supplier for Methanex, both of those come into question, which is ultimately what we’ve seen yesterday with Methanex deciding to cease production in Taranaki,” he said.
“And of course, the impact that’s going to have on jobs in that region is going to be significant.”
Brown said negotiations were being had between different parties regarding Māui’s gas supply.
“As that gas does continue to decline though, that will of course lead to further issues out, which is ... why the Government is looking – particularly for our electricity generation sector – at the LNG importation terminal.”
Opposition parties say the closure throws the need for an LNG terminal into doubt, arguing the Government should either cancel or revise the project before signing it off.
Green Party co-leader Chlöe Swarbrick said the closure would free up gas already available in New Zealand, which “fundamentally disrupts” the viability of a proceeding with an LNG terminal.
“The Government’s argument for the LNG facility is now absolutely wafer-thin. Economic fundamentals have drastically changed, and any responsible government would go back to the drawing board on a cost benefit scenario.
Labour leader Chris Hipkins said the Government’s case for the LNG facility “never stacked up”.
“The Government should admit they have got this wrong and not throw potentially billions of dollars at a project that will be a failure.”
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