LNG Terminal Plan Grounded Until After Election

The New Zealand government's plan to sign a contract for a $1 billion LNG import terminal before the November 7 election has stalled. Associate Energy Minister Shane Jones said 'Father Time has snatched the opportunity away' due to the upcoming election, but this downplays what actually happened.

The real reason is that coalition partners ACT and NZ First moved to kill the timeline. They argued it was 'irresponsible' to sign a contract before polling day. Energy Minister Simeon Brown initially said the government would deliver on its commitment, but later retreated to 'the process will dictate the timing.'

The terminal is meant to be a backstop for gas-fired electricity generation in dry years when hydro lakes run low and domestic gas production declines. The cost of not having it is significant: MBIE data puts the dry-year hit to the economy at $5.2 billion in GDP in 2025 alone.

The government's mere commitment to LNG had already moved the market, with forward wholesale prices for 2028/2029 falling by $20/MWh. This shift is valued at around $800 million a year and could be undone if traders conclude the terminal lacks durable political backing.