Industry faces closure as LNG hopes fade

New Zealand faces a looming energy crisis as the country's primary gas supply from the Maui field nears depletion, with no domestic alternatives on the horizon. Energy analyst John Kidd, speaking on RNZ's 9 to Noon, warns that without imported LNG, nearly half of commercial gas demand could be unmet by 2035, threatening the viability of key industries like dairy, steel, and agriculture. Despite soaring global LNG prices due to geopolitical tensions in the Middle East, Kidd argues that forward prices remain stable and that LNG could still serve as a critical safety net for the energy system, especially given New Zealand’s lack of gas storage and its isolation from international gas markets. He emphasizes that the government must act as a market maker to fund the necessary infrastructure—likely a floating LNG terminal—since no private entity can shoulder the cost alone. While electrification and demand-side solutions are possible in theory, they are too slow, expensive, and technically unfeasible for high-temperature industrial processes, making LNG the least worst option for an orderly transition. The episode highlights a critical policy dilemma: whether to proceed with a high-cost LNG import terminal despite volatile global prices, or risk widespread industrial closures. The government’s procurement process is ongoing, with a decision expected by mid-year, but political uncertainty remains. Kidd stresses that LNG’s flexibility and scalability make it uniquely suited to buffer New Zealand’s energy system during peak demand, especially as hydro and coal reserves are strained. Without strategic intervention, the country risks repeating the cycle of energy crises seen in 2024 and 2025. The conversation underscores the urgent need for coordinated, long-term energy planning that accounts for geography, infrastructure, and industrial resilience.