Methanex to Idle Taranaki Plant Amid Gas Supply Dispute

The methanol manufacturer Methanex announced it will indefinitely idle its production facilities in Taranaki during the first quarter of 2027. The company, New Zealand's sole methanol producer and largest natural gas user, cited a continued decline in domestic gas availability and a lack of new supply as the reasons operations are no longer sustainable. Methanex has reached an agreement to sell substantially all of its natural gas contractual entitlements from early 2027 through the end of the decade.

The decision has triggered a political conflict over the government's plan to build a $1 billion liquefied natural gas (LNG) import terminal. Energy Minister Simeon Brown and Finance Minister Nicola Willis argue the terminal remains necessary to provide backup energy during dry years when hydroelectric levels are low. They attribute the Methanex closure to a 2018 ban on offshore oil and gas exploration implemented by the previous Labour government.

Opposition leaders challenge this justification. Labour leader Chris Hipkins argues that a 20-year lack of new gas discoveries drove the decision, while Green Party co-leader Chlöe Swarbrick called for the cancellation of the LNG project. Swarbrick argues that because Methanex consumed approximately 37% of the country's gas supply, its exit frees up enough gas for electricity generation to make the import facility unnecessary.