- Hon Simon Watts
The Government will contract to build a liquefied natural gas (LNG) import facility in a critical step to strengthen New Zealand's energy security and support economic growth, Energy Minister Simon Watts says.
The decision follows extensive analysis and the first stage of procurement.
"New Zealand is experiencing a renewable electricity boom, but a rapidly declining gas supply has left our electricity sector exposed during dry years, when our hydro lakes run low," Mr Watts says.
"The result is greater reliance on coal and diesel, and ultimately higher electricity prices, putting more financial pressure on families and making businesses less competitive."
Independent analysis from Sense Partners found that higher energy prices have had a significant impact on the New Zealand economy, leading to a $5.2 billion loss in GDP in 2025.
"For Kiwis that means fewer jobs, lower wages and a slower recovery as New Zealand emerges from a challenging period of high inflation and high interest rates," Mr Watts says.
"In the last two years, the Government has taken a series of positive steps designed to improve the affordability and availability of energy, as part of our plan to fix the basics and build the future.
"That includes fostering greater competition through tougher regulation of major energy companies and enabling greater development of New Zealand's natural resources to unleash the supply of renewable and non-renewable energy.
"Establishing an LNG import facility is an important next step."
The LNG import facility will provide a reliable backup fuel source, reducing the impact of dry-year risk on electricity pricing and stabilising electricity costs. It will also add another layer of resilience by giving New Zealand access to additional supply options if domestic gas supply tightens unexpectedly.
"Just having a reliable back up is expected to save Kiwis around $265 million per annum by reducing price spikes and lowering the risk premium built into power bills that exist because of supply challenges, equivalent to around $50 per annum per household," Mr Watts says.
"If domestic gas supply continues to decline and drive-up gas prices, the availability of LNG is estimated to be worth $1.2 billion per annum to the New Zealand economy by 2035. Access to LNG is also expected to protect around 2000 jobs from the economic impact of rising energy prices and gas shortages."
The Government has shortlisted leading proposals and is progressing to commercial contracting, with the aim of signing a contract by mid-2026. The facility could be operational as soon as 2027 or early 2028.
"Located in the Taranaki, the project will create jobs during construction and provide long-term skilled roles once operational, reinforcing the region's role at the heart of New Zealand's energy system," Mr Watts says.
Access to LNG will support many gas-dependent industries to consider their long-term energy needs and invest accordingly, by reducing the risk of supply disruptions and extreme price volatility.
The Government will design an import model that brings LNG in large shipments and only when needed, minimising exposure to international gas prices and keeping the door open for new technologies.
Further details on the procurement process and project milestones will be shared in the coming months.
