Budget 2025: Energy sector welcomes $200m Government gas exploration fund

An energy industry group says the Government’s plan to invest in New Zealand gas exploration sends a strong signal.

In the Budget, the Government said it would set aside $200 million over four years for co‑investment in new gas fields.

Resources Minister Shane Jones said the details were still being worked through, but it showed a willingness for the Crown to take a commercial stake of up to 10-15% in new gas field developments that feed the domestic market.

Energy explorers say the offshore exploration ban put in place by the Labour Government in 2018 had set the industry back and had added sovereign risk.

John Carnegie, chief executive of Energy Resources Aotearoa, said the move sent a strong signal to an industry still suffering the after-effects of the ban.

“We unequivocally welcome today’s, what I describe it a pragmatic and long overdue, commitment to our energy future,” he told the Herald.

“It sends a strong signal to investors that the Government’s serious about locking in secure and affordable energy.”

He said it showed the Government was willing to “get off the sidelines and ensure that our economic growth engine has the fuel it needs”.

Carnegie added it would help “de-risk” the sector.

“They’re signalling they’re going to take back some of the risk that was inappropriately put on to the sector in 2018,” he said.

After the ban, some explorers packed up and left.

“This Government is now saying we acknowledge that there was a policy failure and that they are now going to take action to de-risk.

“It’s a risk-sharing, it’s a burden-sharing, policy, and we obviously we applaud it,” he said.

New Zealand power prices spiked to over $820 a megawatt hour last August, spurred on by unfavourable weather but mostly by sharply declining gas reserves.

The national grid is mostly powered by renewable energy but coal- and gas-powered generation plays a role in backing up the system.

“This [Government plan] will take some time to play out, whereas we’ve obviously got an immediate gas shortage,” Carnegie said.

Meanwhile, Greenpeace Aotearoa said the Budget’s move was a “fighting fund for the war on nature”.

“This is a Scorched Earth Budget delivered in the middle of a climate crisis,” the environmental group said.

“The Government should be doubling down on action to cut emissions – not dumping public money into more fossil fuel extraction.”

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Jamie Gray is an Auckland-based journalist, covering the financial markets and the primary sector. He joined the Herald in 2011.