The country's largest gas user Methanex has announced it will close its Taranaki plant after more than three decades of operation, saying New Zealand's declining natural gas supply has made continuing operations unsustainable.
In a statement on its website, the Canada-based firm announced it had agreed to sell substantially all of its New Zealand natural gas contractual entitlements commencing in the first quarter of 2027 and continuing through the end of the decade when such entitlements expire.
It also said Methanex expected to "indefinitely idle" its production facilities at Motonui, north of Waitara, with methanol manufacturing to cease at the end of February 2027, after 32 years of operation in the country.
The country's sole methanol manufacturer employs around 300 people, with about 95% of production exported to customers in the Asia Pacific region. It uses 40% of New Zealand's gas.
Methanex NZ said it had been managing declining gas availability for several years and, with "no clear path to meaningful new supply", was no longer confident it could continue production.
"Given this uncertainty, we have confirmed the sale of our remaining gas from March 2027. Production in New Zealand will cease at this point," the company told 1News in a statement.
It said it had informed staff and was "committed to supporting them and their families the best we can through this challenging time", adding that "preservation mode" left it positioned for potential opportunities should conditions change.
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Methanex president and chief executive Rich Sumner said the New Zealand operations had made "significant contributions to the Company’s global operations and the New Zealand energy sector".
"However, we have also been preparing for the eventuality of this day given the declining gas availability in the country."
Sumner said Methanex would focus on operating the plant over the coming months and supporting staff before "safely idling and preserving the facility for long-term optionality should future circumstances support a restart of operations”.
Closure expected due to exploration ban – mayor
New Plymouth mayor Max Brough told 1News the closure had been expected for some time, but that did not soften the blow of losing about 300 "high paying jobs" in the region.
"Methanex and the gas industry has been very good to Taranaki, the energy industry. So to get to this point doesn't make it any easier."
Brough said the loss would be felt well beyond the plant itself.
"It's the engineering industry as well, it's the electrical instrumentation industry – it's all sort of support industries that are all highly technical and they're well-paying jobs and careers," he said.
He said the closure was part of a longer trend since the Labour Government's 2018 decision to ban new offshore oil and gas exploration.
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"We are suffering in Taranaki and New Zealand as a direct result of that ban," he said, adding it took seven to 10 years to bring a well on line. "So you draw your own conclusions from those numbers."
Time for the Govt to halt LNG project – Greens
The Green Party said Methanex closure also shuts the door on any arguable reason for the Government to build an LNG import terminal – and called on the Government to cancel the project.
"It's time for the Government to cancel their plans to use $1 billion of taxpayer money to underwrite the LNG import facility," says Green Party co-leader Chlöe Swarbrick.
"Methanex leaving takes the country's largest gas user out of the market and frees up gas supply through to the end of the decade for electricity generation."
Swarbrick said if the Government wasn't prepared to "do the rational thing" and cancel the project then Prime Minister Christopher Luxon "must return to the drawing board before signing any daft deal".
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"The 'gas shortage' the Government has been talking up to try and justify this fossil fuel project is now about to be a great deal smaller," she said.
"But nobody in the real world wanted the LNG import facility in the first place."
Brough, however, disputed the suggestion that an LNG terminal was ever meant to keep Methanex running.
"LNG is there for firming the electricity market in dry years. It's not there to power Methanex – never was," he said. "They're off the mark on that."
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