Auckland (The NZ Today)
The planned exit of New Zealand’s biggest natural gas user, Methanex, is expected to bring more gas supply into the market, potentially easing pressure on industrial users — but experts warn households may not see an immediate drop in their gas bills.
The Canadian-owned methanol producer has announced plans to close its New Zealand operations from next year and sell its existing gas contracts, releasing a significant amount of supply back into the market.
Methanex has at times accounted for close to half of New Zealand’s total natural gas consumption, making its departure a major shift for the country’s energy sector and the Taranaki economy, where the company has operated for more than four decades.
Genesis Energy has already secured major gas contracts previously held by Methanex, with agreements running from March next year until the end of 2029.
Ben Gerritsen, general manager of customer and regulation at gas transmission company Clarus, said the move was a significant change for the local industry but reflected wider challenges facing New Zealand’s gas sector.
He said Methanex’s business model relied on operating in countries with abundant gas supplies, converting gas into methanol for export. However, declining domestic gas production had changed the market environment.
The additional supply could provide some short-term relief, particularly for industrial users that have struggled to secure affordable gas contracts in recent years.
Gerritsen said more available gas could help businesses facing high energy costs and give gas retailers greater flexibility.
However, he cautioned that the impact on household prices would depend on competition among retailers and other market factors.
For residential customers, any reduction may also be limited because the cost of maintaining and operating gas pipelines remains largely fixed.
Looking ahead, the longer-term outlook remains uncertain. New Zealand’s known gas reserves are continuing to decline, and some existing fields are expected to reach the end of production.
Gerritsen said Methanex had historically played an important role in supporting gas exploration and production by providing a major source of demand.
Without a large industrial customer like Methanex, he said maintaining investment in future gas supply could become more challenging.
Source: RNZ, Clarus comments.
