The Government is continuing with the procurement process for a liquefied natural gas (LNG) import facility in Taranaki, to check whether "the commercials stack up," Prime Minister Christopher Luxon says.
“We are very interested in it, obviously, that’s why we kicked it off because we have a dry year risk which drives into huge risk premiums and therefore higher power prices," Luxon told reporters on Tuesday.
"It’s just making sure the commercials stack up [and] we’ll know that at the end of that procurement process," he said.
In February the Government announced its planned LNG import facility which was anticipated to be operating as soon as 2027 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.
But by April, a question mark hung over whether it would definitely be going ahead because of conflict in the Middle East and comments from Luxon previously saying if the business case isn't good, the Government won’t be doing it.
Following a reshuffle with Simeon Brown replacing Watts as Energy Minister, more doubts were cast with Brown telling reporters in April that the world had changed since the initial decision was made.
This comes as BusinessDesk reported that in the last week of April, Cabinet took another look at the LNG import terminal in the context of the conflict in the Middle East, and decided to press ahead.
'We need to solve the dry year risk'
When asked whether the Government had recommitted to the LNG import terminal in April, both Finance Minister Nicola Willis and Brown told reporters separately that the Government was going through a procurement process.
Brown says as part of any final decisions, the Government would be taking into account the situation in the Middle East.
He says the Government had looked at all the alternatives and LNG has come through as the preferred option.
Asked about whether there was interest in things like biomass or pumped hydro, Brown says pumped hydro, which was backed by the last Labour Government, was a "boondoggle" and would not have delivered any energy until 2037.
“We cannot stand by and wait till 2037 to resolve this issue. It needs to be resolved much faster than that.”
Brown says there will be alternatives that companies will continue to invest in like more renewable energy generation, geothermal and others “but we need to solve the dry year risk”.
‘Cannot leave New Zealand high and dry’
In its 2026 economic survey of New Zealand, the Organisation for Economic Co-operation and Development (OECD) said LNG will help restore security of supply but risks locking in fossil fuel dependence and should be treated as a transition fuel only.
When asked about the report, Brown says as Energy Minister, his focus is on making sure we have the affordable, reliable energy that New Zealand needs.
“We cannot leave New Zealand high and dry without the power that it needs.”
Separately, Luxon told reporters he was not interested in the report. “The report’s a load of rubbish.”
“There’s a lot of reports that have a lot of different views on New Zealand. We're the ones that are dealing with a failed energy policy from the last administration," Luxon says.
‘A gold-plated bad idea’
Labour energy spokesperson Megan Woods says the OECD calls into question whether importing LNG is a good deal for Kiwis.
“The report brought into question the very things we’ve been raising, that this will not lead to cheaper energy prices for New Zealanders," Woods says.
“What we really need to see is what is going to reduce energy costs for New Zealanders, and expert after expert is saying that LNG is not the way to reduce our power bills.”
Labour leader Chris Hipkins says the LNG import facility is “a gold-plated bad idea”.
“It’s going to raise the price of power in New Zealand and it’s going to make us more dependent on highly volatile fossil fuels.”
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