{"id":587453,"date":"2026-09-02T01:38:14","date_gmt":"2026-09-02T01:38:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/587453\/"},"modified":"2026-09-02T01:38:14","modified_gmt":"2026-09-02T01:38:14","slug":"methanex-to-indefinitely-idle-nz-plant-in-2027-genesis-energy-secures-11-4pj-of-gas-through-to-2029","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/587453\/","title":{"rendered":"Methanex to indefinitely idle NZ plant in 2027, Genesis Energy secures 11.4PJ of gas through to 2029"},"content":{"rendered":"
\u201cGiven the continued decline in domestic natural gas availability and the lack of a clear pathway to meaningful new supply, Methanex has determined that continued operations in New Zealand are not sustainable and as such has taken steps to optimise value from its remaining New Zealand gas position,\u201d Methanex said.<\/p>\n
\u201cAs a result of this agreement, the company expects to indefinitely idle its New Zealand production facilities during the first quarter of 2027 and will work closely with employees, contractors, suppliers, customers and government stakeholders during this transition period.\u201d<\/p>\n
Rich Sumner, the president and chief executive of Methanex, said: \u201cOur New Zealand production facilities have operated for more than four decades and our people have made significant contributions to the company\u2019s global operations and the New Zealand energy sector.\u201d<\/p>\n
\u201cHowever, we have also been preparing for the eventuality of this day, given the declining gas availability in the country.<\/p>\n
\u201cFor several years we have actively contributed to managing New Zealand\u2019s declining gas environment by matching our operating rates to available supply and, when appropriate, selling gas into the New Zealand energy markets.\u201d<\/p>\n
Sumner said Methanex would focus on operating the Motunui plant over the next several months and then safely idling and preserving the facility for long-term optionality \u201cshould future circumstances support a restart of operations\u201d.<\/p>\n
Methanex said it does not expect to incur material cash costs as a result of this decision and any required updates to production or financial guidance will be released with Methanex\u2019s ongoing quarterly financial communications.<\/p>\n
The company\u2019s New Zealand arm said it would stop making methanol at the end of February next year.<\/p>\n
\u201cLike others, we have been managing declining gas availability for the past several years,\u201d Methanex New Zealand said in a statement.<\/p>\n
\u201cWith no clear path to meaningful new supply, we are no longer confident in sufficient future gas supply to continue production.\u201d<\/p>\n
The company said it was committed to supporting its staff.<\/p>\n
\u201cWhile methanol production is not\u202ffeasible\u202ffor the foreseeable future, we\u202fwill\u202fcontinue to\u202fmonitor upstream activity and gas availability in New Zealand,\u201d it said.<\/p>\n
\u201cThe long-term\u202ffuture of the\u202fNew Zealand\u202fsites\u202fremain\u202fpart of Methanex\u2019s strategic considerations, and preservation mode allows us to remain positioned for potential opportunities should conditions change.\u201d<\/p>\n
Genesis secures more gas<\/p>\n
Separately, Genesis Energy said it has secured extra gas from a third party, covering the period from March next year through to December 2029.<\/p>\n
The company said it had secured about 11.4 petajoules (PJ) from the third party.<\/p>\n
In addition, Genesis exercised its right of first refusal in respect of Kupe gas supply from Beach Energy Resources NZ and Kupe Mining, both units of Beach Energy, securing access of up to 8.6PJ of gas from January 2027 to December 2028.<\/p>\n
This deal was subject to execution of the relevant transaction documentation and required ministerial approval, Genesis said.<\/p>\n
The company is just over half-owned by the Government.<\/p>\n
\u201cTogether, these arrangements strengthen Genesis\u2019 fuel portfolio and gas position through to 2029, providing sufficient gas to meet forecast retail demand and support the transition away from baseload gas generation,\u201d chief wholesale officer Tracey Hickman said.<\/p>\n
\u201cThis additional gas gives us greater choice in how we manage our generation mix and respond to customer demand and changing market conditions,\u201d Hickman said.<\/p>\n
\u201cIt complements our existing fuel arrangements and enhances the flexibility of our generation portfolio,\u201d she said.<\/p>\n
Genesis runs the coal and gas-fired Huntly Power Station, which backs up the national power grid when renewable energy sources \u2013 mostly hydro and wind \u2013 fall short.<\/p>\n
The company is also New Zealand\u2019s largest commercial gas supplier.<\/p>\n
Declining gas reserves<\/p>\n
Methanex\u2019s decision follows a series of sharp downward revisions of New Zealand\u2019s gas reserves over the last few years.<\/p>\n
One analyst said Methanex\u2019s shutdown was likely to mean that less research and less work would go into maintaining the existing fields, thereby hastening their decline.<\/p>\n
In July, Methanex reported a net profit of US$198 million for the second quarter, compared with a loss of US$14m in the first quarter.<\/p>\n
The New Zealand operation produced 46,000 tonnes of methanol in the second quarter of 2026 compared to 158,000 tonnes in the first quarter of 2026.<\/p>\n
Production was lower in the second quarter after it took a planned winter outage to supply gas to the New Zealand electricity sector.<\/p>\n
The plant was restarted in July.<\/p>\n
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.<\/p>\n