New Zealand gas reserves plunge: What’s behind?

AMP
3 days ago
2 min read

A steep 27% drop in New Zealand’s gas reserves has accelerated fears of energy shortages and shaken investor confidence.

With production forecasts revised downward and exploration bans under review, the country faces mounting pressure to revive its upstream sector before the gap becomes unmanageable.

1. Sharp drop in reserves

New Zealand’s proven and probable gas reserves (2P) dropped by 27% in a single year, falling to 948 PJ as of January 1, according to Argus.
The decline stems from extractions (119 PJ) and operator downgrades (234 PJ)—a double blow for future supply.

2. Production forecasts worsen

MBIE now projects annual gas production will dip below 100 PJ/year by 2026, three years earlier than previously expected.
This escalates urgency around energy security and industrial demand.

3. Oil and condensate also declining

Oil and condensate reserves also shrank to 37.2 million barrels, down from 44.7 million.
Since New Zealand’s only refinery closed in 2022, the country now depends entirely on imports for petroleum products.

4. Structural energy risk

Between October and December, quarterly gas production fell to a 40-year low.
Industrial users cut back to avoid grid pressure—a sign of deeper systemic strain.

5. Political and regulatory response

The government plans to repeal the 2018 offshore exploration ban, citing pressure on manufacturers and rising gas prices.
The Crown Minerals Amendment Bill is returning to Parliament to:
- Lower decommissioning risk
- Streamline regulations
- Enable more flexible exploration permits

6. Incentives and investor doubt

NZ committed NZ$200 million (US$120 million) to acquire up to 15% stakes in new gas fields.
Yet, investor confidence remains low. Beach Energy’s CEO voiced concern over the exploration ban's lingering impact on trust.

7. Push for LNG infrastructure

Utility company Meridian Energy warns of a “structural and significant” gas supply gap, and is urging development of LNG import terminals to avoid major shortages.