Methanex doubts overturning oil and gas exploration ban will save NZ business

Friday, 14 November 2025

Methanex hasn’t ruled out dismantling its factories in Taranaki and moving them overseas.

The business case that led Canadian methanol manufacturer Methanex to set up factories in New Zealand no longer holds, and it is not clear the reversal of the ban on new offshore gas exploration permits will improve the situation, the company says.

In a presentation to investors this morning, Methanex president Rich Sumner indicated the company had not yet given up on a future for its New Zealand operations which were still generating cash, but said they were no longer contributing meaningfully to the firm’s overall business performance.

There is speculation both Methanex and the Maui gas field that supplies it with the raw material it turns into methanol could close as early as next year — at least in the absence of development of an adjoining gas field, Maui East, which has been difficult to bring on-stream because of the high concentration of carbon dioxide in its gas mix.

Up until a few years ago, when it operated three factories in Taranaki, the company consumed about 45% of New Zealand’s natural gas, which it turns into methanol for export.

But difficulties securing dwindling supplies of cheap natural gas have seen it cut back production to one plant, which is no longer operating at full capacity.

Not everyone would be sad to see Methanex go; Climate Justice Taranaki demonstrated outside its remaining operating factory earlier this year.

During questioning from analysts, Methanex senior vice-president Kevin Maloney confirmed that dismantling and moving its New Zealand factories overseas was something it had looked at, but made clear there would be technical challenges.

Sumner said the Taranaki basin, which supplies its remaining factory with gas, was “quite mature”.

He partly blamed the former government’s ban on new offshore oil and gas exploration permits, but told investors it was difficult to say whether the coalition Government’s reversal of the ban — and steps it is taking to encourage new exploration — would be enough to improve the situation.

“Developing new gas in the basin has become increasingly complex and, to be quite frank, any recent upstream activity hasn't been that successful.”

At full capacity, Methanex’s New Zealand plants could produce 2.5 million tonnes of methanol, but annual production has dropped back to 400,000 to 500,000 tonnes per year, he said.

Methanex was “continuing to engage with government and upstream partners to encourage more upstream investment”, but was also preparing for other scenarios, he made clear.

Countries such as New Zealand and Chile that had “stranded gas basins” — too small to justify supporting an LNG export facility but too large to support only local demand — had been the “sweet spot” for methanol producers in the past, Sumner said.

But since 2010, the business case has shifted towards producing methanol close to low-cost shale oil fields in countries such as the United States, he said.

Methanex’s New Zealand plants, which are now 40 years old, are also the oldest in the company’s portfolio, he noted.

Ninety-five percent of the methanol Methanex now produces comes from gas basins where the company feels it has “a long, strong future”, with Trinidad and New Zealand — which together account for the remaining 5% — no longer in that category, he said.