Canadian-owned Methanex is preparing to effectively close its New Zealand operations after concluding that declining natural gas availability makes continued methanol production unsustainable. The decision threatens jobs and economic activity across Taranaki, while simultaneously releasing significant gas supplies for electricity generation and other industrial users.
eLocal Report: Based on reporting by RNZ HERE.
New Zealand’s largest natural gas user, Methanex, is preparing to effectively close its Taranaki operation and sell its contracted gas supplies, a decision likely to have consequences extending well beyond the company’s approximately 200 direct employees.
Methanex said there was no longer sufficient natural gas — or a clear pathway towards new supplies — to make its New Zealand operations sustainable. The company has consequently entered an agreement to sell all of its New Zealand natural gas contractual entitlements from the first quarter of next year.
Rather than dismantling the facility, Methanex intends to safely idle and preserve it. That leaves open the possibility of restarting methanol production should sufficient commercially viable gas become available in the future.
The scale of Methanex’s role in New Zealand’s gas market makes the decision nationally significant. The company has historically consumed around 30 to 40 percent of the country’s total natural gas production, while domestic production has declined rapidly in recent years.
Taranaki Faces the Immediate Impact
For Taranaki, the consequences extend far beyond the plant gates.
Methanex employs around 200 people directly, in addition to contractors and suppliers whose businesses depend partly on the operation. New Plymouth Mayor Max Brough told RNZ the decision was disappointing but unsurprising given the shortage of available gas.
Brough warned that many of those losing highly specialised jobs may struggle to find equivalent employment in New Zealand and could ultimately leave the country.
The Taranaki Chamber of Commerce expects the economic effects to spread into hospitality, tourism, contracting and other businesses because of Methanex’s position as a major regional employer and industrial customer.
Chamber chief executive Arun Chaudhari nevertheless pointed to one important distinction: the Motunui facility is being mothballed rather than permanently dismantled.
If sufficient gas is discovered and becomes commercially available, methanol production could potentially return.
Port Taranaki Loses Its Largest Customer
The consequences also reach Port Taranaki, which described Methanex as its single largest customer and a long-standing contributor to the regional economy.
Port chief executive Simon Craddock said the organisation had been preparing for the possibility of Methanex closing as problems in the gas sector intensified.
The loss illustrates how the effects of declining domestic gas production extend through interconnected parts of the regional economy — from extraction and processing through to engineering, transport, port activity and supporting businesses.
Closure Could Ease New Zealand’s Gas Shortage
Paradoxically, Methanex’s departure could provide some immediate relief elsewhere in New Zealand’s energy system.
Because Methanex consumes such a large share of domestic gas, closing the operation releases gas that can instead be purchased by electricity generators and other industrial users.
Resources Minister Shane Jones told RNZ the closure would create a significant volume of gas for the market in the short term, including for electricity generation, fertiliser production and other industrial uses.
Genesis Energy has separately announced that it has secured 11.4 petajoules of additional gas between March 2027 and 2029, equivalent to about 10 percent of national gas production, from an unnamed third party.
Genesis has also exercised its right of first refusal over Kupe gas supply, giving it access to as much as another 8.6 petajoules.
The company said those arrangements provide enough gas to meet forecast retail demand and assist its transition away from baseload gas generation.
Who Is Responsible for the Gas Shortage?
The Methanex announcement has also reopened New Zealand’s political argument over energy policy.
Energy Minister Simeon Brown blamed the former Labour government’s decision to ban new offshore oil and gas exploration, arguing that it damaged the sector, cost regional jobs and contributed to the conditions now confronting Methanex.
Labour leader Chris Hipkins rejected that connection. He argued that New Zealand has not made a significant new natural gas discovery for more than two decades and that exploration had continued without producing the reserves necessary to change Methanex’s position.
The competing arguments expose a deeper issue that extends beyond which government is responsible: New Zealand’s existing natural gas production is declining while parts of the electricity system and industrial economy continue to depend upon gas.
Methanex’s closure may temporarily reduce demand, but it does not by itself resolve that longer-term imbalance.
The $1 Billion LNG Question
The closure has consequently intensified debate over the Government’s proposed $1 billion liquefied natural gas import facility, intended to provide backup energy security when hydro generation is constrained.
Green Party co-leader Chlöe Swarbrick. Photo: RNZ / Reece Baker
Green Party co-leader Chlöe Swarbrick argues Methanex’s departure fundamentally changes the calculation. Removing the country’s largest gas consumer will release supply for electricity generation through to the end of the decade, she said, reducing the gas shortage being used to justify the LNG project.
The Government disagrees.
Energy Minister Simeon Brown said some Methanex gas would become available to electricity generators, but argued it would not provide sufficient long-term backup energy.
Finance Minister Nicola Willis said the Government had already anticipated a potential Methanex closure when assessing the proposed LNG terminal. Even after accounting for that gas entering the market, she said New Zealand remained exposed to dry-year risk when hydro lake levels were low.
That leaves policymakers with a significant question: whether New Zealand should commit around $1 billion to LNG import infrastructure when one of the country’s largest sources of gas demand is disappearing.
Does This Affect New Zealand?
Absolutely — and the implications extend well beyond Taranaki.
In the short term, Methanex’s closure creates an unusual trade-off. Taranaki loses a major industrial employer, Port Taranaki loses its biggest customer and associated businesses face reduced activity. At the same time, a substantial volume of domestic gas becomes available to electricity generators and other industries.
Longer term, the closure raises a much larger question about New Zealand’s industrial and energy strategy.
Methanex has not said methanol production itself has become commercially obsolete. Its stated problem is the availability of the natural gas required to operate the plant. By preserving rather than dismantling Motunui, the company is effectively retaining an option to return if future gas discoveries change the economics.
That makes the next few years particularly important.
New Zealand must determine whether additional domestic gas exploration can provide sufficient reserves, whether imported LNG is required as an energy-security backstop, and how electricity generation will maintain reliable supply as the country simultaneously seeks greater dependence on renewable energy.
There is also an economic question that should not be overlooked. Releasing Methanex’s gas to electricity generators may improve short-term energy security, but New Zealand is achieving that partly through the loss of a major industrial operation, regional employment and export activity.
The immediate gas shortage may become easier to manage.
The harder question is whether losing a major industrial consumer should be regarded as solving an energy problem — or as evidence of one.
Source: RNZ — Methanex closure to have ripple effect across the region, 2 September 2026. Original RNZ images, captions and credits preserved.
Independent reporting. Original context. Credited sources.