Methanex to close Taranaki plant after 40 years

Methanol producer and major gas user Methanex says it will sell its New Zealand gas entitlements and “indefinitely idle” its plant in Taranaki after 40 years of operation. 

Methanex said it had struck a deal to sell substantially all of its New Zealand natural gas contractual entitlements, starting in the first quarter of 2027 and continuing through to the end of the decade when the entitlements expire. 

Methanex employs around 300 people. It is New Zealand’s only methanol manufacturer. About 95% of its production is exported to customers in the Asia Pacific region. 

Separately, Genesis Energy said it has secured extra gas from a third party covering the period from March next year through to December 2029. 

“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 optimise value from its remaining New Zealand gas position,” Methanex said. 

“As a result of this agreement, the company expects to indefinitely idle its New Zealand production facilities during the first quarter of 2027 and will work closely with employees, contractors, suppliers, customers and government stakeholders during this transition period.” 

Rich Sumner, the president and chief executive of Methanex, said: “Our New Zealand production facilities have operated for more than four decades and our people have made significant contributions to the company’s global operations and the New Zealand energy sector.” 

“However, we have also been preparing for the eventuality of this day, given the declining gas availability in the country. 

“For several years we have actively contributed to managing New Zealand’s declining gas environment by matching our operating rates to available supply and, when appropriate, selling gas into the New Zealand energy markets.” 

Sumner said Methanex would focus on 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”. 

Methanex does not expect to incur material cash costs as a result of this decision and any required updates to production or financial guidance will be released with Methanex’s ongoing quarterly financial communications. 

Separately, Genesis Energy said it has secured extra gas from a third party, covering the period from March next year through to December 2029. 

The company said it had secured about 11.4 petajoules (PJ) from the third party. 

In addition, Genesis exercised its right of first refusal in respect of Kupe gas supply from Beach Energy Resources NZ and Kupe Mining, both units of Beach Energy, securing access of up to 8.6PJ of gas from January 2027 to December 2028. 

This deal was subject to execution of the relevant transaction documentation and required ministerial approval, Genesis said. 

The company is just over half-owned by the Government. 

“Together, these arrangements strengthen Genesis’ fuel portfolio and gas position through to 2029, providing sufficient gas to meet forecast retail demand and support the transition away from baseload gas generation,” chief wholesale officer Tracey Hickman said. 

“This additional gas gives us greater choice in how we manage our generation mix and respond to customer demand and changing market conditions,” Hickman said. 

“It complements our existing fuel arrangements and enhances the flexibility of our generation portfolio,” she said. 

Genesis runs the coal and gas-fired Huntly Power Station, which backs up the national power grid when renewable energy sources – mostly hydro and wind – fall short. 

The company is also New Zealand’s largest commercial gas supplier. 

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.