NZ Faces Deepening Energy Security Crisis as Gas Reserves Plunge 23 Percent

New Zealand’s natural gas reserves have suffered a dramatic decline over the past year, intensifying concerns about the country’s long-term energy security and prompting the Government to accelerate efforts to rebuild domestic gas supply and prevent future electricity shortages.

Energy Minister Simeon Brown today revealed that the Ministry of Business, Innovation and Employment’s latest Petroleum Reserves report shows New Zealand’s remaining gas reserves have fallen by 23 percent in just 12 months, dropping to 731 petajoules.

The sharp decline comes as several of the country’s major gas fields approach closure and production falls faster than previously forecast, raising fresh warnings about rising electricity prices, industrial disruption, and growing dependence on coal-fired generation during dry years.

“New Zealand’s gas reserves have fallen sharply, and the latest figures show exactly why this Government is acting urgently to secure our energy future,” Brown said.

Gas Supply Shrinking Faster Than Expected

According to the report, roughly half of the reserve decline reflects gas already consumed during 2025, while the remaining reduction stems from operators reassessing previously overestimated reserves — particularly at the Pohokura gas field, one of the country’s largest remaining producers.

The report also confirms that the Maui gas field, historically one of New Zealand’s most important energy assets, is expected to cease production later this year.

In total, eight domestic gas fields are forecast to shut down between now and 2036, dramatically reducing the country’s available supply unless replacement production is developed.

Energy analysts have long warned that New Zealand’s natural gas sector faces structural decline following years of underinvestment, regulatory uncertainty, and declining exploration activity.

Brown said the figures underscore the seriousness of the challenge.

“The report shows production is falling faster than expected,” he said.

“That is a real problem for Kiwi households and businesses.”

Energy Security and Power Prices Under Pressure

Natural gas remains a critical component of New Zealand’s electricity system, particularly during periods when renewable generation falls short due to low hydro lake levels, limited wind generation, or reduced solar output.

Gas-fired generation acts as a flexible backup source that helps stabilise the grid and prevent electricity shortages during periods of peak demand.

Without adequate gas supply, New Zealand becomes increasingly reliant on coal-fired power generation — a more carbon-intensive and often more expensive alternative.

“Gas is used to generate the electricity that keeps the lights on when the sun’s not shining, the wind’s not blowing, and the lakes are low,” Brown said.

“Without enough gas to back up renewable generation, power bills go up, factories shut down, and Kiwis lose their jobs.”

The minister pointed to the energy crisis experienced during New Zealand’s dry year in 2024, when wholesale electricity prices reportedly surged above $800 per megawatt hour.

The spike triggered significant disruption across major industries, including production cuts at the New Zealand Aluminium Smelter, while some businesses reportedly shut permanently due to soaring energy costs.

Economic Costs of Energy Instability

The Government argues that policy decisions made under the previous Labour Government — particularly the 2018 ban on new offshore oil and gas exploration permits — contributed significantly to declining investor confidence and reduced domestic supply development.

Brown claimed the resulting energy shortages and higher power prices had already inflicted substantial economic damage.

“Higher energy prices have had a significant impact on the New Zealand economy, leading to a $5.2 billion loss in GDP in 2025 alone,” he said.

“Kiwis are paying the price in higher power bills, lost jobs, and a weaker economy.”

Industry groups have repeatedly warned that uncertainty surrounding future gas availability has discouraged long-term industrial investment and placed pressure on sectors heavily dependent on reliable energy supplies, including manufacturing, food processing, and heavy industry.

Coal Use Rising as Gas Declines

One of the Government’s central concerns is that falling gas supply may increase New Zealand’s dependence on coal-fired electricity generation, undermining emissions reduction efforts.

“When gas runs short, firms turn to coal,” Brown said.

“Coal produces around twice the carbon emissions of gas for the same amount of energy, so a shortage of gas is bad for our economy and bad for our climate.”

New Zealand has already experienced increased coal imports during periods of hydro shortages and constrained gas supply, despite the country’s broader renewable energy ambitions.

Energy experts say the transition toward a low-emissions electricity system becomes significantly more difficult without flexible gas generation supporting intermittent renewable sources.

Government Launches Multi-Pronged Energy Security Strategy

In response to the worsening supply outlook, the Government has announced several major initiatives aimed at stabilising domestic energy supply and restoring investor confidence.

Among the measures are:

• Reversing the previous offshore oil and gas exploration ban to encourage renewed exploration and investment

• Establishing a $200 million Gas Security Fund to support faster development of domestic gas projects

• Beginning procurement processes for a potential liquefied natural gas (LNG) import facility to provide backup supply during dry years

• Advancing Carbon Capture, Utilisation and Storage (CCUS) technology to enable lower-emissions domestic gas production

Brown said New Zealand had become increasingly isolated compared with other advanced economies in its limited access to secure and diversified gas supplies.

“Every other comparable country in the OECD has access to secure, diversified gas supplies,” he said.

“New Zealand is the outlier, and we need to secure affordable energy.”

Energy Debate Likely to Intensify

The Government’s renewed support for domestic gas development is expected to fuel continued debate between energy security advocates and environmental groups.

Supporters argue gas remains essential to maintaining affordable and reliable electricity during the transition toward greater renewable generation.

Critics, however, warn that expanding fossil fuel production risks locking New Zealand into long-term carbon dependency at a time when global economies are accelerating decarbonisation efforts.

Brown insisted the Government’s focus remains on balancing affordability, reliability, economic growth, and emissions management.

“Kiwis deserve power they can afford, an economy backed by reliable energy, and jobs protected from avoidable shocks,” he said.

The latest reserve figures are expected to intensify political and industry discussions about how New Zealand navigates the increasingly complex transition between renewable ambition and maintaining secure baseload energy supply.