New Zealand has shortlisted two providers for a planned LNG import terminal, with the objective of strengthening the security of New Zealand’s energy supply and reducing electricity prices (New Zealand government statement, 09/06/2026).
The government explained this decision by noting that roughly 60% of the country’s electricity generation is based on rainfall-dependent hydropower, making the system highly exposed to so-called “dry years”. The statement further noted: “Normally, New Zealand relies on gas and coal to keep the lights on and the economy running during dry years. But our domestic gas production is falling fast. All of New Zealand’s major gas fields are in decline and coal can’t fill the gap on its own (we don’t have the capacity to burn more in existing generation plant)”.
- Based on our data, natural gas production has halved since 2014, falling by 6%/year and reaching 2.6 bcm in 2025, which is a decline of 19% compared with 2024 (Enerdata Global Energy & CO2 data).
- The energy shortfall already led to production cuts in 2024 at major chemical and metals processing facilities, as gas was prioritised for electricity generation (Argus Media, 09/06/2026).
The two shortlisted proposals are both located within Port Taranaki. Authorities are still determining how the project will be financed, including discussions with major power companies, but they have stated it will not be funded through a levy on household electricity bills. The government plans to advance the two bidders to a request-for-proposal (RFP) stage, with a contract expected to be signed with a preferred provider later in 2026, and the facility projected to begin operations in 2028.
This LNG project is also part of wider reforms in the electricity market designed to require generators and large consumers to plan earlier for potential winter supply shortages. The government has opened consultation on a new Winter Energy Reliability Obligation, which would require major electricity buyers to secure backup supply ahead of expected dry winters and obligate generators to demonstrate access to firm fuel when hydro storage levels decline (Reuters, 09/06/2026).
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