Methanol exporter Methanex signs supply deal, securing future in Taranaki
Wednesday, 18 July 2018
Methanex, New Zealand's largest gas user, has secured supplies until 2029, confounding warnings that a ban on offshore oil exploration would see it leave within a decade.
In a statement the Vancouver-headquartered company said it signed agreements 'to underpin over half of Methanex's 2.4 million tonnes of annual production capacity in New Zealand for a period of 11 years through 2029'.
Prior to the Government announcing an end to new offshore oil and gas exploration permits in April, officials at the Ministry of Business, Innovation and Employment warned that without a new gas discovery, the company would be operating at below full capacity from 2021 and could quit New Zealand by 2026.
'Methanex will require a new discovery if it is to continue operating in New Zealand over the medium to long-term,' one MBIE briefing warned.
READ MORE: Oil industry claims before ban, interest in exploring in NZ was the highest in years
Dean Richardson, Methanex New Zealand managing director said the announcement was positive for the Taranaki region.
'We're delighted to secure these agreements which provide confidence in our operations in Taranaki through 2029. We continue to be disappointed over the Government's surprise halting of off‐shore oil and gas exploration and if this policy remains in place it will eventually have a negative effect on our business and New Zealand's economy.'
Energy Minister Megan Woods welcomed the Methanex statement.
'It's good to see this level of certainty in the context of the long term transition we announced in April. This is good news for jobs in the region and sits alongside the work we are undertaking alongside local agencies about transitioning the economy,' a spokeswoman said.
Green Party energy spokesman Gareth Hughes said the announcement showed MBIE 'was wrong and overly pessimistic, as was some of the exaggerated hyperventilation from the oil industry'.
Cameron Madgwick, chief executive of industry lobby group Pepanz said the agreement was only for half of Methanex's current output.
'Unless new supply is locked in to fill the shortfall this will hurt jobs and exports from New Zealand.
'This is precisely the warning that Ministry of Business, Innovation and Employment gave in its advice to the Government. It underlines exactly why we need exploration to keep New Zealand homes and businesses running.'
On April 12, the Government announced that it would no longer offer new offshore exploration permits, with no guarantee of new onshore beyond 2020. It later emerged that the announcement was made on the basis of a political decision between the three coalition partners, with no Cabinet paper written on the move.
National's energy spokesman Jonathan Young, the MP for New Plymouth, said 'Methanex's considered approach is in stark contrast to the Government's decision on a whim in April to bring a halt to future oil and gas exploration in New Zealand without any consultation with the industry itself'.
Methanex operates three plants in Taranaki, two at Motunui and one in the Waitara Valley, which convert gas to methanol, almost all of which is exported. It employs 270 people in New Zealand.
The company is Port Taranaki's largest customer.
Just over a week ago, Todd Energy confirmed construction of a $100 million gas-fired plant to provide peaking electricity generation would begin next year.