The Government isn’t considering pausing its plans to build a liquefied natural gas (LNG) terminal despite the world's biggest LNG production terminal being knocked out in the ongoing Middle East war, Energy Minister Simon Watts says.
On Wednesday, Watts told reporters the LNG import terminal was proceeding to plan.
“We’re under commercial negotiation with a number of parties in order to shortlist to be able to perform a contract for consideration and signing," Watts said.
“We remain on track to have that signed midway through this year.”
In February the Government said a LNG import facility in Taranaki, which will cost "north of $1 billion," could be operating as soon as 2027 or early 2028 to remove the risk associated with dry years. The cost of the infrastructure will be paid for via a levy on electricity, and the cost connected with importing LNG will be paid by users of gas produced from LNG.
Conflict in the Middle East has seen Qatar's Ras Laffan Industrial City - the site of the largest LNG production terminal in the world - hit by missile strikes. This LNG terminal supplies one-fifth of the world’s super-chilled fuel and gas exports from the Persian Gulf supply about 20% of world demand.
In a statement, QatarEnergy's chief executive Saad Sherida al-Kaabi said: "The damage sustained by the LNG facilities will take between three to five years to repair. The impact is on China, South Korea, Italy and Belgium. This means that we will be compelled to declare force majeure for up to five years on some long-term LNG contracts.”
QatarEnergy expects that it would take up to five years to repair, impacting supply to markets in Europe and Asia.
LNG is natural gas that has been cooled and liquified so it can be transported easily.
On its website, the Ministry of Business, Innovation and Employment (MBIE) said it was monitoring the impact of the conflict in the Middle East on LNG supply closely.
"The medium- to long-term impacts of the conflict on the LNG market are unclear at this time, because there is also a significant increase in LNG production capacity coming online."
"International Energy Agency forecasts show a 50% increase in supply capacity from 2025 to 2030 across the world, driven largely by new LNG capacity coming online in North America," MBIE said.
"There are opportunities for New Zealand to secure supply from non-Middle East locations, including Canada and Australia."
In February, the Government first announced it would contract to build a LNG import terminal in Taranaki. At the time, Watts said: “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.”
“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.”
Watts said the cost was subject to commercial negotiation but it would be about north of a billion dollars.
A government fact sheet provides more details around the costs but suggests when it comes to the cost of the LNG, there's two parts to it: the cost of providing and operating the LNG infrastructure, and costs directly associated with the import of LNG into the country.
'They should just cancel it'
Following the Government’s announcement, there were heated exchanges between Prime Minister Christopher Luxon and Labour leader Chris Hipkins. And in his State of the Nation speech, Hipkins promised to scrap the Government’s proposed LNG terminal if Labour takes office before contracts are signed.
Speaking to reporters on Wednesday, Hipkins said the Government shouldn’t just put a pause on the LNG import facility.
“They should just cancel it.”
“The LNG import facility makes us more dependent on fossil fuels. It has the potential to push up electricity prices unpredictably and ultimately, it isn’t going to give New Zealand the sort of energy security that we need,” Hipkins said.
“We have an abundance of renewable energy in New Zealand. It’s cheaper. It can be reliable if done right and that’s where the Government’s focus should be.”
21 Comments
Incompetent fools. Could achieve MUCH better energy security by incentivising/subsidizing solar energy and electrification of our driving fleet, among other things. Can't help but suspect deep-seated corruption, more than ever, in our current government.
Industry needs globally competitive process heat which solar panels, windmills, carbon credits and UN feelz can't give you.
https://www.1news.co.nz/2026/03/24/mccain-to-close-hastings-vegetable-p…
https://www.thepress.co.nz/nz-news/360972463/watties-closure-threatens-…
So you're saying if we had LNG, those companies wouldn't have closed?
MUCH better energy security by incentivising/subsidizing solar energy doesn't solve our lack of globally competitive process heat. LNG is the least worst option now that we have turned our noses up at domestic natural gas and coal. Bad luck if you are in an industry that requires process heat - it's only 35% of NZ's total energy consumption so not that important.
Gosh, our current regime is really tight with the global fossil empire. Do I want to pay for this idiotic enterprise with "Levies" when the answer is as simple as addressing the demand side of the equation? Nope. If this goes through, I'll simply beef up my solar system and pull the fuse at the pole!
You could run off your car if there isn't enough sun and go and get it charged if needed. In that scenario could the grid become redundant for residential power consumers? And can industry and commercial cover the full cost of it?
Solar becomes a whole lot more attractive if you can save your entire power bill!
can industry and commercial cover the full cost of it? Not to mention places like hospitals that rely on the grid. Off gridders need a globally competitive, reliable grid as much as the rest of modern society.
" It is shown that resilience exhibits daily oscillations as the grid’s effective structure and the power demand fluctuate. This can lead to a substantial decrease in grid resilience, explained by periods of highly clustered generator output. Moreover, the addition of batteries, while enabling consumer self-sufficiency, fails to ameliorate these problems."
Not worth juicing your car for home power unless absolutely necessary. They're only manufactured to a set number of cycles to stay above 80%
'Solar becomes more attractive if you can save your entire power bill'?
No kidding.
I spent 5k upfront, in 2004. 7k since.
No power bills for 22 years.
But some folk are slow learners
I can imagine Chippy cleaning the floor with Luxon in this sort of thing in the election debates.
Barbara Edmonds still hasn't hit her straps I think compared to Willis. But also Edmonds is a tax lawyer so given the right area she might also hold her own quite well in the Finance debates. And beyond the main talking points I'm not sure how deeply Willis understands some of the material.
Yeah Chippy can rely on Labours strategy of shutting down Marsden and gas exploration, talking up green hydrogen plans and ad hoc importation of Indo jungle coal while food and wood processing industries were laid to waste.
Indeed, hopefully a clear connection can be made between Labour’s ban on offshore exploration and the lack of cheap gas for industry and power supply. I don’t like importing LNG but we are importing coal and dragging our feet in finding more reliable (hydro and geothermal) renewable supplies.
I don't like importing LNG either. Gen IV nuclear is way to go - then we can make our own hydrocarbon fuel and NH3 on shore and utilise our existing hydrocarbon grid and vehicle fleet.
Didn't think there needed to be a clear connection. Believers gonna believe no matter what.
Unbelievable. No long term strategic thinking involved. What a colossal waste of money.
"No amount of evidence will ever persuade an idiot" (not Mark Twain, apparently)
Ah yes negotiating to shortlist for consideration.
Seems unlikely that favourable terms in line with their probably optimistic costing will get across the line, especially in light of recent events
"At issue is the unclear aim of the facility. While Watts and other ministers have repeatedly pointed to it as a dry-year solution, to shore up the grid when hydro lakes run low, the Cabinet paper noted a “spillover benefit” could include providing gas to other industries as well. At the same time, however, the paper noted that “over-reliance on LNG could link domestic gas prices to global markets, increasing costs for consumers”.
https://newsroom.co.nz/2026/03/25/lng-plan-worst-of-both-worlds-environ…
It is difficult to understand what possible logic they have applied to this decision....whatever it may be they dont appear willing to articulate it.
When you double-down and you started with stupid
...
(they were to follow, those dots...)
Plenty of stupid decisions but there is usually an attempt at justification, and even that appears missing here.
Nats seem to have lost the ability to read the room
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