New Zealand LNG Import Terminal Faces Uncertainty as Economics Come Under Review
New Zealand’s proposed LNG import terminal faces growing uncertainty as officials weigh whether the project’s economics justify moving forward amid shifting energy market conditions.
(Reuters) — New Zealand's plan to build a liquefied natural gas import terminal faces uncertainty, with Prime Minister Christopher Luxon saying on March 30 the government would approve the project only if the business case stacked up.
In February the government shortlisted contractors to build the facility in Taranaki, on the country's North Island. The plan was that the terminal would be ready to receive LNG in 2027 or early 2028. The government had announced the project in 2025 to boost the country’s energy security and bring down costs.
Luxon told Radio New Zealand on Monday that the government was still in the procurement stage and while there had been a number of bidders, if the business case didn’t make sense, they would not sign off on the project.
"It's purely going to come down to the economic return and the cost-benefit and in the commercial case - if it's not an attractive commercial case, we won't be doing it," Luxon said.
On March 30, the New Zealand Herald, citing sources, reported that government ministers were planning on delaying or axing the plan to build the facility as rising prices, driven by the war in the Middle East, had changed the economics of the plan.
New Zealand has been exploring developing the facility to shore up electricity supplies as declining domestic gas production leaves the power system more exposed in dry years, when low lake and dam levels curb hydro generation. The proposed model would allow the country to import LNG in large cargoes only when needed, aiming to reduce reliance on coal and diesel during supply shortfalls while limiting prolonged exposure to volatile global gas prices. Energy Minister Simon Watts has put the indicative cost at about NZ$1 billion ($600 million), with import capacity of 12 petajoules a year.