The Government says a new liquefied natural gas import terminal in Taranaki that could open as early as next year will save New Zealand households millions of dollars.
Kiwi households will have to pay a levy ($2-4 per megawatt-hour), but the Government insists in the long run they will be better off.
Labour leader Chris Hipkins, who swiftly dubbed the levy a “gas tax”, cast doubt over whether his party, if elected at the next general election, would honour the contract soon to be negotiated with a major player.
“This proposal itself is uncertain, so you’re asking me to provide certainty when the current Government aren’t providing certainty,” Hipkins said.
Speaking at Monday’s post-Cabinet press conference, Prime Minister Christopher Luxon and Energy Minister Simon Watts said the new facility would save New Zealand households around $265 million per year, the equivalent of about $50 per house.
The Government is aiming to have a contract finalised by the middle of this year. The facility could be operational as soon as 2027 or early 2028.
Luxon said New Zealand was experiencing a “renewable energy boom” but swiftly declining gas supply. There was no good reason for New Zealand to be in this position, he said.
“A country like ours that is blessed with abundant natural resources should have affordable energy,” he said.
He blamed high power prices partly on the previous Labour-led Government’s 2018 oil and gas ban, a 100% renewable energy target and the Lake Onslow proposal which had “a chilling effect on ongoing investment projects”.
“The consequence of those decisions is New Zealand has faced major energy supply risks in recent years.”
As gas supplies dwindled, New Zealand had increased reliance on diesel and coal, he said. Relying on coal was not an option, the pair said, as the Hunty power station was at capacity and New Zealand required more “options.”
“This is a strategic energy security asset for New Zealand,” Luxon said.
Getting liquefied natural gas (LNG) into New Zealand requires an LNG import terminal – a facility that can receive LNG from an LNG carrier, store it, regasify it and send out the resultant gas for use by end users.
The Act Party hailed the move as marking the end of the Labour Government’s 2018 oil and gas ban, which was repealed by the coalition Government in July last year.
“This is a sad but necessary bookend to Labour’s reckless oil and gas ban. We’ve gone from being energy-secure to having to import foreign gas by ship,” Act’s energy and resources spokesman Simon Court said.
A Government factsheet said it was too early at this stage to confirm the location of the facility but the shortlisted submissions are all in the Taranaki region.
While speaking to reporters at the press conference at Parliament, a question about what the cost would be to Kiwi households was not answered directly with neither Watts or Luxon willing to provide a dollar figure. Watts insisted the net benefit to households was $50.
Watts stressed that LNG would not be a replacement for renewable energy.
Luxon said the project didn’t preclude expansion in other areas like batteries and renewable projects, “but we need to get rid of the dry-year risk. If we can de-risk that ... that’s the thing that puts a downward pressure on prices”.
Julia Gabel is a Wellington-based political reporter. She joined the Herald in 2020 and has most recently focused on data journalism.