Oil & Gas

A Pacific island nation is preparing to import liquefied natural gas (LNG) for the first time, addressing its lack of a receiving station for fuel, which is currently in high global demand. New Zealand, in particular, is grappling with a severe energy crisis caused by a shortage in electricity supply.

This scarcity has driven up prices to unprecedented levels and forced several companies to halt or delay production. According to the Washington-based Specialized Energy Platform, domestic gas production has declined, and natural gas reserves have dropped by 20% over the past year, ending in January 2024.

In response, New Zealand's president and energy minister have proposed urgent measures aimed at bolstering the liquefied gas and hydropower sectors, the wholesale electricity market, and power plants. Prime Minister Christopher Luxon and Energy Minister Simon Brown have introduced a plan to remove regulatory barriers for the construction of an LNG import terminal. The government has also considered lifting restrictions on private sector imports, allowing LNG to be received through existing infrastructure, such as the Marsden Point oil refinery or a regasification vessel.

However, the move to import LNG has sparked criticism from environmental groups and the Green Party, who argue that investing in fossil fuels during a climate crisis is counterproductive. Party spokesman Scott Willis compared the investment to "buying socks on the Titanic," stressing that fossil fuels are not a sustainable future energy source. Greenpeace also condemned the decision, asserting that it undermines efforts to combat climate change and disrespects Pacific nations vulnerable to rising sea levels.

Amid the growing energy crisis, New Zealand's government has also repealed a six-year ban on offshore oil and gas exploration, particularly in the resource-rich Taranaki region. This decision comes after the country's reliance on renewable sources like solar energy proved insufficient, leading to increased use of diesel and coal. With domestic natural gas production dropping sharply, the government’s new measures aim to address the current energy challenges and restore stability to the sector.