Methanex, the country’s only methanol manufacturer, says it has struck a deal to sell all of its natural gas contractural entitlements and expects to “indefinitely idle” its production facilities in Taranaki.
Methanol is a clear liquid chemical used in products like plastics, paints, cosmetics and fuels. On its website, Methanex said approximately 95% of its production in New Zealand is exported to customers in the Asia-Pacific region. The company is also NZ's largest user of natural gas.
“Given 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," Methanex said on Wednesday.
“As 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.”
On the company’s natural gas contractual entitlements, it said it had entered into an agreement to “sell substantially all” of these commencing in the first quarter of 2027, continuing through the end of the decade when entitlements expire.
Methanex president and chief executive Rich Sumner said its NZ production facilities had operated for more than four decades and its people had made “significant contributions” to the company and NZ’s energy sector.
“However, we have also been preparing for the eventuality of this day given the declining gas availability in the country,” Sumner said.
“For several years we have actively contributed to managing New Zealand’s declining gas environment by matching our operating rates to available supply and, when appropriate, selling gas into the New Zealand energy markets.
“We are now focused on supporting our team members during this transition period, safely operating the plant over the next several months and then safely idling and preserving the facility for long-term optionality should future circumstances support a restart of operations.”
The company did not expect to incur material cash costs as a result of this decision.
Green Party urges government to cancel LNG plans
The Green Party said with Methanex leaving, this “shuts the door on any arguable reason for the Government to build an LNG (liquefied natural gas) import terminal” and called for these plans to be cancelled.
"Methanex leaving takes the country's largest gas user out of the market and frees up gas supply through to the end of the decade for electricity generation,” Green Party co-leader Chlöe Swarbrick said.
"If they're not going to do the rational thing and cancel their plans, at the very least, [Christopher] Luxon must return to the drawing board before signing any daft deal."
"New Zealanders deserve real energy independence, cheaper bills, local manufacturing and jobs and a resilient economy. An LNG terminal was never going to deliver that, and today's news makes that reality even more stark," Swarbrick said.
The Government first announced its plans for an LNG import facility in February.
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