LNG backtrack could spook investors, gas users warn

Thursday, 23 April 2026

The Government could commit the same mistake it has frequently accused Labour of making and reduce investor confidence in the economy if it belatedly pulled the plug on its plan to import LNG, industrial gas users are suggesting.

Former energy minister Simon Watts announced in February that Cabinet had made a “definitive decision” to facilitate the construction of an LNG terminal.

However, shortly before he was suddenly replaced by Simeon Brown in the portfolio on April 2, fellow ministers made clear final decisions had yet to be made, with Finance Minister Nicola Willis saying she was “certainly not going to be doing a pro forma signature on that one”.

Energy industry sources told The Post they now believed the investment was hanging in the balance and that overseas companies that responded to the Government’s call for proposals on the basis an investment decision had been made would be unimpressed by the possible change of heart.

Read more:

• Inside Cabinet’s case for importing LNG ‒ and the puzzles that remain

• Watts loses energy portfolio amid clashing views on LNG and Lake Onslow

• Minister sticks to guns on LNG, saying price outlook for imported gas remains favourable

One said it was understood that some of the bidders had spent more than $1 million, individually, preparing their bids.

Energy industry consultant Martin Gummer led an informal delegation of 15 industrial gas users to Parliament at the start of the month to reinforce the case for importing LNG.

The delegation was intended to reflect a cross-section of industries and included representatives from Fulton Hogan, Woolworks, Kawerau-based tissue manufacturer Essity, Dominion Salt and the Association of New Zealand Bakers.

Importing LNG was the best of “the imperfect options” given the time some needed to transition away from gas and the lack of capacity on electricity networks, Gummer said.

The Government has frequently accused the former Labour government of adding sovereign risk to the economy by banning new offshore oil and gas exploration permits in 2018.

“The pattern that already exists of chopping and changing political decisions is bad enough between governments, but within a government, it wouldn’t be a very good look either,” Gummer said.

He assumed that if the LNG terminal was scrapped or delayed, the companies that had bid to build it would be pretty unhappy.

“It would not send a good message to any potential offshore investor in New Zealand energy assets.”

Energy Minister Simeon Brown said the Government was “working through a procurement process as we speak”.

“Once that’s been completed, the Government will make final decisions.”

He said shortly after his appointment to the portfolio that the conflict in the Middle East had “changed everything”.

But Watts made clear that advice he had received from officials contradicted that view and the longer-term outlook for LNG supply remained broadly positive.

Josh Adams, spokesperson for the Major Gas Users Association, said he believed the LNG decision would be a “line call”.

There was some frustration among its members, with the message being “just get on with it”, he said.

Government officials are understood to have viewed importing LNG as the best way to ensure there would be gas available in a “dry year” to burn at the Unit 5 turbine at the Huntly Power Station while avoiding starving industrial users of natural gas.

The turbine is the country’s largest and is not capable of burning coal or biomass.

However, the LNG plan has been unpopular with environmental campaigners who maintain opportunities are being missed to switch faster to renewable energy.

There is speculation concerns over the unpopularity of a government levy on electricity to recoup the cost of the investment, and public sentiment favouring less reliance on overseas fuel in the wake of the Iran conflict, precipitated the Government’s second thoughts.

Gas was still needed to produce many of the materials the country relied on from plastics and processed food to fertiliser and the glue used in plywood, Adams said.

“People would be horrified if they knew what was at stake,” he said.