New Zealand has shortlisted contractors to build a liquefied natural gas (LNG) import facility to boost energy security, provide a reliable backup power source and support economic growth, Energy Minister Simon Watts said on Monday.
The government aims to sign a contract by the middle of this year for an import facility in Taranaki, on the country's North Island, that would be ready to receive LNG in 2027 or early 2028.
The model will allow LNG to be imported in large shipments and only when needed, limiting exposure to global gas prices.
Despite a boom in renewable electricity generation, mostly hydropower, declining gas supplies have left New Zealand's power sector vulnerable during droughts when water levels at the lakes and dams run low, Watts said.
"The result is greater reliance on coal and diesel, and ultimately higher electricity prices, putting more financial pressure on families and making businesses less competitive," Watts said in a statement.
"Establishing an LNG import facility is an important next step."
The minister gave an indicative cost of around NZ$1 billion ($600 million) and an import capacity of 12 petajoules a year.
"The biggest unknown is how is this going to work? Who orders the cargoes, who aggregates, who supplies? That is very unclear to me and to most others," said a person familiar with the tender process, who declined to be named as the bidding was confidential.
The centre-right government elected in 2023 has sought to diversify energy sources. In 2025, it passed a law to reopen the country for offshore oil and gas exploration, lifting a ban imposed by the previous centre-left Labour-led government.
So far only one company, the private EnZed Energy, has been awarded exclusive rights to an offshore block.
Watts said access to LNG could deliver economic benefits estimated at NZ$1.2 billion ($721.6 million) annually by 2035 and help protect around 2,000 jobs from the impact of rising energy prices and gas shortages.
While Australia is the closest potential LNG supplier to New Zealand, its exporters might not have many cargoes available for their trans-Tasman neighbour, as southeastern Australia also faces a looming gas shortage.
Canberra is finalising a gas market review that will mandate 15-25% of gas from east coast LNG export plants remains in Australia. Some companies are also considering plans to import LNG to help fill the supply gap.
($1 = 1.6631 New Zealand dollars)
(Reuters - Reporting by Renju Jose in Sydney and Helen Clark in Perth; Editing by Sonali Paul)