- Hon Chris Bishop
- Hon Shane Jones
The Coalition Government has broadened the scope and terms of a $200 million commercial co-investment fund designed to boost New Zealand's constrained gas supply and reduce perceptions of sovereign risk, Resources Minister Shane Jones and Associate Finance Minister Chris Bishop say.
The fund was initially intended to support new gas field developments, which can take up to 10 years to bring on online. Now, the Gas Security Fund will enable a diverse range of investments that will accelerate or increase the volume of gas to market in the short-, medium- and long-term. This will provide the flexibility needed to respond to New Zealand's energy security challenges as they change.
"As our gas reserves dwindle, a growing gap is emerging in our energy system, driving up electricity prices for households and threatening the viability of gas-dependent industrial and commercial businesses. The outlook has worsened even in the time since I announced this funding commitment in May. New investment in exploration and development is urgently needed," Mr Jones says.
"While developing new fields remains essential, we can't wait for those to come online while watching the de-industrialisation of our regions. We're looking for a portfolio of investments to back incremental increases in supply now, while building the reserves we'll need in the future.
"Short-term projects could include additional drilling in existing fields and production facility upgrades. Medium-term projects could involve exploration and appraisal drilling. Long-term projects could include greenfield exploration beyond Taranaki."
The Gas Security Fund will also support gas storage projects, recognising their strategic role in stabilising supply and managing seasonal demand.
Mr Bishop says a major barrier is a still significant perception of risk associated with investing in New Zealand's petroleum sector following the previous Government's ban on new petroleum exploration outside onshore Taranaki.
"The fund will offer a range of commercial investment structures which will be worked through with potential partners as proposals are considered. Cabinet has agreed that each proposal will be considered alongside expert and legal advice on potential risks and compliance with our international obligations," Mr Bishop says.
"This is a pragmatic approach to supporting the petroleum sector to deliver the gas we need to keep energy affordable and reliable as we transition to lower-emission alternatives."
The Gas Security Fund will actively encourage the use of regional procurement and the local labour market wherever possible. Investment decisions will be made jointly by the Minister for Resources and the Associate Minister of Finance, supported by an independent advisory panel with in-depth knowledge of the gas sector.
The fund will be administered by the Ministry of Business, Innovation and Employment through Kānoa, the Regional Economic Development and Investment Unit.
Kānoa will call for expressions of interest later this month, with Ministers aiming to move quickly to support investment-ready projects.
"We are standing alongside our gas sector to deliver the energy New Zealand needs, We urge our colleagues across the political spectrum, for the sake of energy affordability and security, to be pragmatic about the role of natural gas and support these efforts," the Ministers say.
