Source: New Zealand Government
Cabinet has moved quickly to approve a raft of actions to address the serious risk to New Zealand’s energy security and affordability, Energy Minister Simeon Brown and Resources Minister Shane Jones say.
Cabinet has committed to:
- Act with urgency to reverse the ban on offshore oil and gas exploration, with legislation passed by the end of 2024
- Remove regulatory barriers to the construction of critically needed facilities to import Liquefied Natural Gas (LNG) as a stop gap
- Ease restrictions on electricity lines companies owning generation
- Ensure access for gentailers to hydro contingency
- Improve electricity market regulation
“New Zealand currently has an energy shortage. The lakes are low, the sun hasn’t been shining, the wind hasn’t been blowing, and we have an inadequate supply of natural gas to meet demand,” Mr Brown says.
“That has led to New Zealand currently having the highest wholesale electricity prices of any of the countries we normally compare ourselves to. It is devastating for our manufacturing and export sectors, and is sadly leading to firms reducing production or closing entirely.
“New Zealand needs abundant, affordable energy. That’s why the Coalition Government is taking a series of immediate actions to restore confidence to our energy sector and remove regulatory barriers that have stopped firms generating electricity or bringing in the fuel that Kiwis need.”
Natural gas production dropped by 12.5 per cent in 2023 and by a further 27.8 per cent for the first three months of this year, creating a nationwide shortage. This has resulted in reductions in manufacturing output, and electricity generators resorting to more coal and diesel to power our electricity system.
“Unlike many other countries, New Zealand is blessed with energy resources under our feet. Natural gas has drawn new industries to our shores, created well-paying jobs in our regions, and powered the producing, manufacturing, and exporting businesses that are the backbone of our economy,” Mr Jones says.
“It is critical for New Zealand that these keep going, but already some businesses are having to close their doors until energy prices come down; with hundreds of jobs at stake. That’s why we are taking urgent action to shore up our energy security.
“Oil and gas explorers need to have the confidence to invest here and know they will have a key place in New Zealand’s energy sector now and into the future.”
The Ministers will report back to Cabinet in October with options for mitigating sovereign risk in an LNG facility and domestic gas production.
