Methanex sells gas for winter electricity supply, again

Monday, 12 May 2025

An aerial view of Methanex’s Motunui facility. The company will pause methanol production for eight weeks effective immediately and instead sell its gas to Contact Energy and Genesis Energy. (File photo)

For the second winter in a row, Methanex will stop producing methanol for export and instead sell its gas back to the country’s electricity generators.

Last year, Methanex New Zealand paused its two plants at Motunui in Taranaki to free up gas and help ease the electricity shortage. It restarted with reduced production in October.

The Canadian-owned company will temporarily pause methanol production for eight weeks effective immediately to on-sell 2.8 petajoules of gas to electricity retailers Contact Energy and Genesis Energy.

An industry advocate said the sale of the gas, which is enough to supply 112,000 households for a year, would be a solution to the security of supply issues the country had experienced in the past.

The sale would help Contact to run its Taranaki Combined Cycle gas-fired power station and gas peaking units in Stratford during the winter.

In a statement, Methanex NZ managing director Stuart McCall said the company collaborated with the two generators to “take proactive steps ahead of winter’s peak demand to strengthen the country’s energy resilience”.

It is the second winter in a row that Methanex has sold gas to electricity retailers. (File photo)

“By working closely with these electricity generators to make our gas available now, we’re helping to ensure a stable and reliable power support when Kiwis need it most,” he said.

Methanex would retain its full workforce and undertake planned maintenance activities to position the operation for an efficient restart in July, the statement said.

“Methanex has played a key role in supporting national electricity security over the last five years by adjusting its operations when needed to ensure sufficient supply for homes and essential services,” McCall said.

“This is not sustainable without further upstream investment.”

Although Methanex did not disclose what it made selling the gas to retailers in 2024, BusinessDesk reported that the company received $166.88 million over the 12 months to the end of December 2024.

Energy Resources Aotearoa chief executive John Carnegie says the Methanex move will lower New Zealand’s GDP.

Last year’s sale of gas coincided with a company restructure, which resulted in about 70 job losses in September last year.

The move to sell the gas this year was welcomed by Energy Resources Aotearoa chief executive John Carnegie, who described it as a “Band-Aid on a gaping wound”.

He said Methanex was again propping up the electricity system and forgoing production and export earnings to do so, thereby “harming New Zealand’s gross domestic product”.

“This is yet another winter where security of supply issues in the electricity system have seen Methanex forgo production to bolster generation.”

Contact Energy said the deal has been struck against the backdrop of record lowest first-quarter national hydro inflows and continued dwindling upstream gas supplies.

It expected to close down the cycle gas plant at the end of the winter.