NZ Gas Reserves Drop 27% as Govt Pledges $200M Boost to Revive Energy Sector

New data revealing a 27% year-on-year decline in New Zealand’s natural gas reserves has prompted an urgent government response aimed at revitalising the domestic energy sector. Resources Minister Shane Jones announced a series of bold measures designed to secure the country’s energy future and reinvigorate investment in gas exploration and production.

“These new figures are a stark reminder that we must act now,” Jones said. “New Zealand needs a secure supply of affordable and reliable gas—both to keep our industries running and to keep the lights on in Kiwi homes. The decline is further proof that overturning the previous Government’s oil and gas ban was the right decision.”

The release of this alarming data has thrown the spotlight on the fragility of New Zealand’s energy reserves and sparked renewed debate around the role of gas in the country’s energy mix.

Gas as a Cornerstone of Industrial and Energy Resilience

Jones warned that without a stable domestic gas supply, New Zealand faces the risk of "de-industrialisation", particularly in regional areas heavily dependent on gas for manufacturing. Industries already struggling with volatile pricing and limited supply could see further erosion of their competitiveness.

“As an island nation, we must take full advantage of our indigenous gas reserves to power our homes and businesses,” Jones said. “The idea that we can reach 100% renewable energy without any form of thermal backup is not only naïve—it’s dangerous.”

He emphasized that while the Government remains committed to clean energy goals, a balanced and pragmatic transition must include reliable gas to ensure economic stability.

$200 Million Budget Injection for Gas Development

The Government’s Budget 2025 has earmarked $200 million over four years for Crown co-investment in new domestic gas field developments. Under the initiative, the Government will be able to take a commercial stake of up to 15% in new projects that supply the local market.

This co-investment aims to:

• Reduce perceived sovereign risk

• Stimulate offshore investment

• Stabilise domestic gas supplies

• Ensure price predictability for major users

According to Minister Jones, this funding is intended to give both regulatory certainty and financial backing to prospective energy ventures, allowing them to proceed with exploration and development activities.

Legislative Reform to Support Exploration Confidence

To complement this funding boost, the Government is advancing the Crown Minerals Amendment Bill, which will:

• Remove the 2018 exploration ban, opening up more regions for new permits

• Provide regulatory flexibility for how exploration permits are granted

• Adjust rules around decommissioning liabilities to ensure a better risk balance

• Reduce bureaucratic barriers that discourage investment

Jones assured industry stakeholders that the proposed changes will restore confidence in New Zealand’s energy future by removing uncertainty and supporting innovation.

“The sector can’t operate with one hand tied behind its back. These reforms will provide the stability and tools companies need to do what they do best—find and produce energy.”

Investment Boost Policy and Broader Economic Goals

The gas sector revival effort also forms part of the broader Investment Boost policy announced in the Budget, which seeks to enhance New Zealand’s economic resilience by promoting high-value sectors such as energy, infrastructure, and advanced manufacturing.

The Government’s stance has attracted support from industry groups and regional leaders, who argue that energy security is essential not just for economic growth, but also for managing the transition to cleaner energy sources in a pragmatic and sustainable way.

Balancing the Energy Trilemma: Reliability, Affordability, and Sustainability

While critics of fossil fuel investment point to the global urgency around decarbonisation, Minister Jones maintains that energy reliability and affordability must not be sacrificed in the process.

“This is not about abandoning our climate responsibilities. It’s about ensuring we don’t undermine the economy and livelihoods of New Zealanders while we decarbonise,” he said.

The Government's energy policy now leans heavily on a dual-track approach: investing in renewables while preserving gas as a foundational fuel source to enable a smoother and economically feasible transition.

Looking Ahead: A New Energy Strategy for a Stronger NZ

With gas reserves dwindling and regional industries under pressure, the Government's swift and ambitious response represents a pivotal shift in energy policy. It underscores a renewed commitment to national self-reliance, energy diversification, and industrial competitiveness.

The coming months will be critical as the Crown Minerals Amendment Bill progresses through Parliament and new exploration opportunities begin to materialize under the revised investment framework.

For New Zealand, the message is clear: the time to act is now—before the energy foundation on which the country depends erodes any further.