Shane Jones opens $200m gas security fund for proposals next month

A $200 million fund aimed at improving gas security opens next month. Photo / Getty Images

Resources Minister Shane Jones says a $200 million fund aimed at increasing the availability of natural gas will open next month.

The Government was looking for proposals that would accelerate or increase the volume of gas, or which would enable gas to be stored, so that it was available when most needed for industry and homes, he said.

Natural gas remained critical to the energy system while New Zealand transitioned to more renewable energy sources.

“Until then, it’s needed to get us through periods of high demand and for industries that require consistent, high-temperature energy.

“Declining gas production is pushing up costs for businesses and households and constraining economic growth.”

A gas advisory panel is being established to ensure decisions are informed by deep commercial and technical expertise, particularly given the complexities of gas exploration and market conditions in New Zealand.

The panel would provide expert technical advice to the decision-making ministers, who are Jones and Associate Finance Minister Chris Bishop.

The fund’s opening date for expressions of interest is January 12.

Jones said the Government was moving “at pace” to restore confidence in the gas sector, which was affected by the previous Labour-led Government’s ban on new offshore exploration in 2018.

In May, as part of the Budget, the Government set aside $200m of tagged contingency over four years for a Gas Security Fund, which was aimed at addressing the waning gas supply and restoring investor confidence.

Last month, the Government announced the fund’s scope was to be expanded to enable a broader range of investments to accelerate or increase gas supply in the short, medium and long term.

Last year, the faster-than-expected run-down of offshore gas reserves helped to drive a spike in wholesale power prices to $820 a megawatt hour (MWh) compared with a previous winter average of about $150MWh.

Gas accounts for about 8% of New Zealand’s electricity generation.

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