New Zealand’s largest gas user is walking away. Methanex will stop making methanol at its Motunui plant in Taranaki in the first quarter of 2027, ending more than four decades of production and taking with it the single biggest source of demand in the country’s shrinking gas market.
The Vancouver based company said in a statement released on 1 September, which was Wednesday afternoon in New Zealand, that it had agreed to sell substantially all of its New Zealand natural gas contractual entitlements from the first quarter of 2027 and continuing through the end of the decade, when those entitlements expire.
“Given the continued decline in domestic natural gas availability and the lack of a clear pathway to meaningful new supply, Methanex has determined that continued operations in New Zealand are not sustainable and as such has taken steps to optimize value from its remaining New Zealand gas position,” the company said. It expects to indefinitely idle the plant during the first quarter of 2027 and does not expect to incur material cash costs from the decision.
Chief executive Rich Sumner said the New Zealand plants had run for more than four decades and staff had made significant contributions to the company’s global operations. “However, we have also been preparing for the eventuality of this day given the declining gas availability in the country,” he said. “We are now focused on supporting our team members during this transition period, safely operating the plant over the next several months and then safely idling and preserving the facility for long-term optionality should future circumstances support a restart of operations.”
The buyer turned out to be Genesis Energy. In a market announcement the generator said it had secured roughly 11.4 petajoules of additional third party gas for the period from March 2027 to December 2029. It has separately exercised its right of first refusal over Kupe gas held by two Beach Energy subsidiaries, securing access to up to 8.6 petajoules from January 2027 to December 2028, subject to documentation and ministerial approval.
Genesis chief wholesale officer Tracey Hickman said the extra gas “gives us greater choice in how we manage our generation mix and respond to customer demand and changing market conditions”. The company said the arrangements gave it enough gas to meet forecast retail demand and support its move away from baseload gas generation.
That is the neat market explanation. The harder part is what happens in Taranaki. RNZ reported that Methanex employs around 200 people, not counting contractors and suppliers, and that the company has historically taken 30 to 40 percent of all the gas produced in New Zealand. The union E tū put the figure higher, saying in a statement on Wednesday afternoon that Methanex employs around 300 workers in New Zealand.
E tū director Mat Danaher said the shutdown marked the end of an era for the region. “This is gutting for the workers who have built their careers at Methanex, and for their families and the wider community that depend on these skilled, well-paid jobs,” he said. He called for the government to work with unions, iwi, industry and the community on retraining and new industry rather than leaving workers to carry the cost.
New Plymouth Mayor Max Brough told RNZ the announcement was disappointing but not unexpected. “They’ve got no continuity of supply. They don’t have enough gas coming and they’re making the best of a bad situation,” he said. He warned that freeing up the gas would push prices up for everyone else. “You need a baseline consumer to keep the price down for others because make no mistake, they’ve subsidised New Zealand’s gas at a retail level and for other users for decades.” Many of the workers losing jobs would struggle to find similar work, he said, and would likely leave the country.
Taranaki Chamber of Commerce chief executive Arun Chaudhari said the effects would spread well beyond the plant gate. “They’ll be impacts across almost every sector as we’ve known it,” he said, pointing to hospitality and the visitor economy. He found some comfort in the plant being idled rather than demolished. “The good thing is that they are idling the plant which means there is some hope that if there is gas that can be used commercially to manufacture methanol again that is what will happen.”
Port Taranaki said it was saddened to lose its single largest customer. Chief executive Simon Craddock said the port had been preparing its business for the decision to make sure it remained sustainable in the long term, and thanked Methanex for “their decades-long commitment to our business and the region”.
The politics arrived within hours. Resources Minister Shane Jones told RNZ’s Checkpoint the closure was no surprise and would create short term relief. “In the very short term, it creates an opportunity for more gas to come into the market to assist industrial users,” he said, naming fertiliser makers and electricity generators among them. Energy Minister Simeon Brown blamed the previous government’s offshore exploration ban. Labour leader Chris Hipkins rejected the link, saying New Zealand had not had a significant new gas find in more than 20 years and the ban did not change that.
The sharpest argument is about the government’s planned liquefied natural gas import terminal. Green Party co-leader Chlöe Swarbrick said the closure removed the case for it. “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,” she said. Finance Minister Nicola Willis said the government had already assumed Methanex would go when it planned the terminal. “Even with that additional gas coming into the market, we would still face a dry year risk, a shortage of gas in years when there isn’t enough water in the hydro lakes,” she said. Newswire reported in August that the Ombudsman found officials wrongly withheld the modelling behind that terminal.
None of this came out of nowhere. Methanex mothballed its Waitara Valley plant in 2021 and cut back to the single Motunui site in 2024, when about 70 jobs went, according to E tū. Newswire reported in May that proven and probable gas reserves had fallen 23 percent to a record low of 731 petajoules, and in April that the Maui field would wind up production at the end of 2026, a year earlier than the government had forecast. The government has since opened a fifth petroleum exploration bid round off Taranaki and offered $1.2 billion in loans to help businesses switch off gas.
What is left is a country with a lot less industrial gas demand and a lot less industrial gas capability. The plant is being preserved rather than pulled down, which keeps a restart theoretically alive if a large new field is ever found. On current reserves, that is a long shot.
What do you think should happen in Taranaki now that its biggest industrial employer is winding down? Leave a comment below and tell us.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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