Methanex announces new natural gas supplies to keep it in business until 2029

Methanex now has enough gas supply to keep going until 2029. Photo / NZ Herald

Methanex, the country's largest user of natural gas, says it has secured the company's future in Taranaki until 2029 after signing deals for enough gas for over half of its 2.4-million tonne methanol production until then.

It didn't name who it had signed the agreements with but said they would combine with other natural gas producers to secure supply to its New Zealand facility until 2029.

Methanex chairman and chief executive John Floren said the New Zealand operation was ideally located to supply the growing Asia Pacific market and the agreements provided a long-term gas supply.

Managing director of Methanex NZ Dean Richardson said the company continued to be disappointed by the Government's "surprise halting" of offshore oil and gas exploration and warned it would eventually have a negative effect on the company and the New Zealand economy.

Nevertheless, he was delighted to have secured the agreements which were positive news for staff, contractors and service providers in Taranaki.

"We see these agreements as an important step in supporting regional jobs and providing ongoing energy security for New Zealand," Richardson said.

"Gas, and the continued production of methanol in New Zealand play a positive role in the transition to a lower carbon future," he said in a statement.

The announcement contradicts advice from the Ministry of Business, innovation and Employment, which said that following the Government's decision to end offshore oil and gas exploration, Methanex would not be able to operate at full capacity from 2021 and would stop completely after 2026.

"Methanex will require a new discovery if it is to continue operating in New Zealand over the medium to long-term," MBIE said in a briefing paper to Energy Minister Megan Woods.

Woods today welcomed Methanex's announcement.

"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," Woods said in a statement.

National's energy and resources spokesman Jonathan Young said the announcement would boost confidence in Taranaki.

"This decision will certainly bolster confidence in the Taranaki region after the Government announced they will not be issuing any new offshore exploration licences and will be reviewing whether the same will apply to onshore after the next election.

"Methanex's considered approach is in stark contrast to the Government's decision on a whim in April to bring a halt to future oil and gas exploration in New Zealand without any consultation with the industry itself," Young said in a statement.

Methanex last year had 270 staff in New Zealand, earning twice the average Taranaki wage, and about 100 contractors.

It contributed $640 million to the Taranaki economy, accounting for 8 per cent of the region's economy, and $834m to the national economy.

The Government has announced a package of measures for the Taranaki region from its Provincial Growth Fund to soften the impact of the end of the fossil fuel industry, and Government ministers have visited the region to allay fears about the impact of the ban.