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<\/p>\n(Bloomberg) — New Zealand plans to sign a contract for its first liquefied natural gas import facility before the November election, with the government betting cheaper global LNG prices in coming years will make the fuel an affordable and reliable backup for renewable electricity.<\/p>\n
The procurement process is underway, with a preferred bidder expected to be selected before the vote, Energy Minister Simeon Brown said in an interview last week. Prices for LNG are forecast to continue to come down as new supply outside of New Zealand becomes available, he said.\u00a0<\/p>\n
The South Pacific nation relies heavily on hydropower, which leaves it vulnerable to dry years when there is little rain or snow to fill the lakes. There were shortages of electricity and prices spiked in 2024 during one such period, and the government plans to have the shipboard import terminal and regasification plant running by 2028 to mitigate that risk.\u00a0<\/p>\n
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\u201cEvery four years we have a dry year,\u201d Brown said, adding that dwindling domestic supplies mean the country needs to look overseas. \u201cIf we can\u2019t get the gas out of the ground domestically, we\u2019re going to need it somewhere else. We see it as an insurance against the dry year risk, it\u2019s about resilience, it\u2019s about reliability, and also about affordability.<\/p>\n
The electricity companies, known as \u201cgentailers\u201d in New Zealand because they both generate and retail electricity, have to work out how they will pay for the plan, Brown emphasized. \u201cWe\u2019ve said it very clearly, it\u2019s their obligation to fund this, because it\u2019s their dry year risk that they must manage.\u201d<\/p>\n
\u201cWe\u2019re in commercial negotiations for the gentailers to run a commercial funding model for them to pay for it,\u201d he said.<\/p>\n
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\nPhotographer: Hagen Hopkins\/Getty Images<\/p>\n
While the long-term solution to the question of energy reliability may include renewable options, Brown emphasized that the LNG import plan was the only solution that could be done quickly, and be in place in just a few years for when there is a repeat of the 2024 dry year.\u00a0<\/p>\n
\u201cWe\u2019re not prepared as a government to leave New Zealand in a position where we effectively have a deindustrialization of our country, because we don\u2019t have the molecules to be able to create electrons to keep the lights on,\u201d he said, criticizing the Labour government\u2019s 2018 ban on offshore oil and gas exploration and lack of planning for the transition to a lower-carbon economy.\u00a0<\/p>\n
\u201cGas is critical to the transition. It is a critical transition fuel to enable that transition in a smooth manner,\u201d he said. \u201cWe\u2019ve ended up with a very unsmooth transition, which is a direct result of the previous government\u2019s policies.\u201d<\/p>\n
The global LNG market had been expected to move into a glut this year, however the shutdown of Qatar\u2019s export plant, the world\u2019s biggest, due to the war in Iran has tightened the outlook. The conflict has also highlighted the dangers of relying on energy from the Middle East.<\/p>\n
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New Zealand has now built up a substantial coal stockpile at the coal-fired power plant in Huntly in case there is a dry year before the LNG plant is available, Brown said, adding that this provides \u201ca significant amount of additional resilience that we didn\u2019t have going into 2024.\u201d<\/p>\n
The opposition Labour Party is opposed to the plan, and the question is likely to be hotly debated ahead of the election later this year. The party\u2019s energy spokeswoman Megan Woods has called it a \u201cknee jerk reaction\u201d to waning gas supplies, which is \u201cexcessive and rushed, and rules out viable alternatives.\u201d<\/p>\n
\u00a92026 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) — New Zealand plans to sign a contract for its first liquefied natural gas import facility 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