Exporter secures NZ future with gas deal
Methanex, a methanol exporter and New Zealand’s largest gas user, has secured gas supplies until 2029, confounding warnings that a ban on offshore oil exploration would see it leave within a decade.
In a statement the Vancouver head quartered company said it had signed agreements ‘‘to underpin over half of Methanex’s 2.4 million tonnes of annual production capacity in New Zealand for a period of 11 years through 2029’’.
Prior to the Government announcing an end to new offshore oil and gas exploration permits in April, officials at the Ministry of Business, Innovation and Employment (MBIE) warned that without a new gas discovery, the company would be operating at below full capacity from 2021 and could quit New Zealand by 2026.
‘‘Methanex will require a new discovery if it is to continue operating in New Zealand over the medium to long term,’’ one MBIE briefing warned.
Dean Richardson, Methanex’s New Zealand managing director said the announcement was positive for the Taranaki region.
‘‘We’re delighted to secure these agreements, which provide confidence in our operations in Taranaki through 2029. We continue to be disappointed over the Government’s surprise halting of offshore oil and gas exploration and, if this policy remains in place, it will eventually have a negative effect on our business and New Zealand’s economy.’’
Energy Minister Megan Woods welcomed the Methanex statement.
‘‘It’s good to see this level of certainty in the context of the long-term transition we announced in April. This is good news for jobs in the region and sits alongside the work we are undertaking alongside local agencies about transitioning the economy,’’ a spokeswoman said.
Green Party energy spokesman Gareth Hughes said the announcement showed MBIE ‘‘was wrong and overly pessimistic, as was some of the exaggerated hyperventilation from the oil industry’’.
On April 12, the Government announced that it would no longer offer new offshore exploration permits, with no guarantee of new onshore permits beyond 2020.
It later emerged that the announcement was made on the basis of a political decision between the three coalition partners, with no Cabinet paper written on the move.
Cameron Madgwick, chief executive of industry lobby group Pepanz, said the Methanex announcement was excellent news, but the moves by the Government meant it was ‘‘a temporary reprieve’’.
‘‘There is only 10 1⁄2 years of gas supply left in New Zealand. Clearly we need new exploration and discoveries to keep homes and businesses supplied beyond this time.’’
Methanex operates three plants in Taranaki, two at Motunui and one in the Waitara Valley, which convert gas to methanol, almost all of which is exported. It employs 270 people in New Zealand.
The company is Port Taranaki’s largest customer.
Just over a week ago, Todd Energy confirmed that construction of a $100 million gas-fired plant to provide peaking electricity generation would begin next year.
‘‘There is only 10 1⁄2 years of gas supply left in New Zealand. Clearly we need new exploration.’’ Pepanz CEO Cameron Madgwick