PM says no decision on Taranaki LNG terminal has been made despite speculation
Monday, 30 March 2026
Prime Minister Christopher Luxon insists no decision has been made about the future of the proposed liquefied natural gas terminal in Taranaki despite growing speculation the idea could be scrapped.
Luxon told Newstalk ZB a decision on whether to proceed with the likely $1 billion terminal would come down to a commercial business case and if it made sense to proceed with the plan.
A decision on the terminal, who would build it and where it was ultimately be placed was due to be made mid-year with an eye to having it operational by late 2027 or early 2028.
However, speculation has continued to mount that Government ministers were now rethinking the project and raising questions about if it would go ahead.
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The main driver of the concern was the ongoing Middle East conflict, which had driven LNG prices up significantly in recent weeks.
Asian LNG prices were up more than 100% on what they were before the conflict started, outstripping even the rise in crude oil prices.
“I’m just brutally going to make a decision on the commercial case,” Luxon said.
“If it doesn’t stack up we won’t be doing it.”
Luxon said that decision would be made at the end of the procurement process, which was the middle of the year.
The Government planned the terminal in Taranaki, as a solution to “dry-year” winter electricity shortages, such as in 2024 when prices were so high businesses closed their doors.
The terminal was being funded through a “levy” on power bills.
Luxon confirmed a number of bidders had already expressed an interest to be involved in building the terminal and their tenders would be investigated in the middle of the year and not now, given the influence the war in the Middle East was having on the global energy prices.
“They [the bidders] have got to make it stack up and we will have to make a call,” he said.
The prime minister said they had to also take into account fluctuating LNG prices.
“Purchasing LNG is one thing, but we have to make sure we get this thing [terminal] the right size and it’s fit for purpose.
“I genuinely want to make sure the cost benefit is there and the business case is right. If it’s a good business case, then yes, we will do it, if not, we won’t.”
If the Government opted to scrap the plan it would come as a significant blow to Taranaki’s engineering sector, which had been buoyed by the plan to build the terminal in the region.
New Plymouth MP David MacLeod had championed the terminal plan, describing it in February as the largest energy project for Taranaki since the “Think Big” initiatives in the 1980s.
The plan to operate the terminal in Taranaki had also got the full support of Port Taranaki boss Simon Craddock who was keen for the Taranaki Regional Council-owned business to potentially be the base for the terminal.
Craddock said in February the LNG development would be a boon for Taranaki.
“It’s a great confidence boost for Taranaki, which has weathered several challenging years through the decline in oil and gas activity.
“We have a skilled and experienced engineering and fabrication sector in Taranaki that has developed in support of the energy industry, so there’s the opportunity for this skill base to be tapped into for an LNG project, providing economic benefits for the wider region.”
The Opposition had been against the plan since it was first mooted and Labour energy spokesperson Megan Woods said she was not surprised the Government was potentially having second thoughts.
“I would be hugely worried if there weren’t members of Cabinet questioning whether to go ahead with the proposal,” she told Newstalk ZB.
“We’ve said from the outset, LNG connects us to global volatile gas markets,” she said.