The Government of New Zealand has announced plans to construct a liquefied natural gas (LNG) import facility to bolster the country’s energy reliability and economic expansion.
Prime Minister Christopher Luxon and Energy Minister Simon Watts confirmed that the facility will act as a backup fuel source aimed at managing risks linked to dry years, stabilising electricity prices and countering the reduction in domestic gas production.
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The introduction of LNG is expected to generate annual savings exceeding NZ$265m by reducing volatility in electricity prices and decreasing the risk premium currently included in power bills.
Furthermore, the venture is set to provide industries heavily reliant on gas with a buffer against supply disruptions and significant price fluctuations.
The LNG pricing model is designed to maintain incentives for continuous investment in renewable energy projects, offering renewable investors’ assurance that they can support intermittent renewable sources with a dependable backup solution.
The decision to proceed with the LNG facility follows thorough analysis and marks the initial phase of a procurement process that began as part of the government’s energy package in late 2025.
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By GlobalDataLeading proposals for the facility have been shortlisted and are advancing towards commercial contracts, with the aim of finalising an agreement by mid-2026. If successful, operations could commence by 2027.
Although the precise location of the facility is yet to be confirmed, it is likely to be situated in the Taranaki region, with further announcements anticipated in mid-2026.
This LNG initiative also aims to enable gas-dependent industries to assess their long-term energy requirements and make informed investments, while reducing exposure to supply interruptions and price instability.
The import model will involve large shipments of LNG only, when necessary, thereby minimising susceptibility to international gas prices and allowing scope for new technologies.
The costs associated with LNG infrastructure will be covered through an electricity levy, reflecting its role as insurance against dry-year risks.
Meanwhile, expenses related to importing LNG will be borne by users of the gas produced from LNG, including the cost of LNG and processing.
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.”
