Budget 2025: $200m earmarked for new gas fields could be increased

Friday, 23 May 2025

Resources Minister Shane Jones says he has an understanding with fellow ministers that the money set aside in the Budget for the Government to co-invest in new gas fields could be increased if there were good enough prospects.

Jones announced on Thursday that the Government had earmarked $200 million over four years in the Budget to take a stake of up to 15% in the development of new gas fields.

The funding has been prompted by concerns that existing natural gas fields are being depleted faster than expected and there may often not be sufficient gas in future to supply industry while also leaving enough for electricity generation.

“Natural gas will continue to be critical in delivering secure and affordable energy for New Zealanders for at least the next 20 years. We are already feeling the pain of constrained supply,” Jones said on Budget day.

The funding allowance has prompted outrage from the Green Party.

Co-leader Chlöe Swarbrick told Parliament on Thursday that in a “climate and inequality crisis”, the Government was “taking money away from whānau with a new baby at home and setting it on fire by ploughing it into new fossil fuel exploration”.

But Jones appeared to hint that he would have liked the sum to be larger.

Minister for Infrastructure and RMA reform Chris Bishop had been very supportive and there was potential for the funding to be increased, Jones told The Post.

“Whether or not it's a suitably large enough incentive, only time will tell.

“We'll start modestly and if there are deals that need to be sweetened-up to increase energy security and lower energy prices, then we'll ‘go back to the well’ again,” he said.

Government officials are understood to be confident the co-investment offer would not breach New Zealand free-trade agreements, for example with the EU, that appear to rule out new subsidies for fossil fuels.

Jones said any government investments would be made on a “commercial basis”, with it investing in gas fields alongside developers and on the same terms.

“It's not our intention to offer concessionary loans or anything that triggers the anti-subsidy rules. We will be very vigilant about that.”

The co-investment offer could nevertheless be attractive for private sector developers for two reasons, he said.

It might help if they believed they had found a viable prospect but could not easily access all the capital they needed to bring it to production.

“These are tremendously expensive ventures.”

It would also show the Government was serious about wanting new gas fields, he said.

Jones is planning to attend a gas industry conference in Singapore early next month in a bid to drum up interest from explorers, but indicated there were existing prospects that could be considered for investment.

He said he had gained the impression that Austrian oil giant OMV had recommitted to New Zealand after a period during which it tried to sell its local operations.

“They have got a new chap running their New Zealand division and they are also moving towards getting their new global chief executive out here at some point in time.”

OMV encountered hydrocarbons in 2020 at its Toutouwai-2 exploration well, in an existing permit offshore from Taranaki, that it has yet to fully appraise.

“We want them to sink some more capital in the water, not just dip their toes,” Jones said.

Todd Energy also had an undeveloped discovery, Karewa, off the coast of Raglan, he noted.

John Carnegie, chief executive of Energy Resources Aotearoa, most of whose members have some involvement in the oil and gas sector, expected any government investments would be skewed towards the development of gas fields, rather than exploration.

“It shows investors that New Zealand is a jurisdiction that they can now safely invest in for the longer term and that almost matters as much, if not more, than the quantum of the investment.”