Cabinet Approves Urgent Measures to Address Energy Crisis

Minister Brown highlighted the severity of the current energy shortage, citing low lake levels, insufficient sunlight, and lack of wind, along with a significant drop in natural gas production.

The New Zealand Cabinet has swiftly approved a series of actions to tackle the country's critical energy security and affordability issues, according to Energy Minister Simeon Brown and Resources Minister Shane Jones.

Key decisions include the reversal of the ban on offshore oil and gas exploration, with legislation expected to pass by the end of 2024. Cabinet has also agreed to remove regulatory barriers hindering the construction of essential facilities for importing Liquefied Natural Gas (LNG) as an interim solution, and to ease restrictions on electricity lines companies owning generation assets. Additionally, steps will be taken to ensure access for gentailers to hydro contingency and to improve electricity market regulation.

Minister Brown highlighted the severity of the current energy shortage, citing low lake levels, insufficient sunlight, and lack of wind, along with a significant drop in natural gas production. This has led to New Zealand experiencing the highest wholesale electricity prices among comparable countries, severely impacting the manufacturing and export sectors, with some firms being forced to reduce production or close down entirely.

"New Zealand requires abundant, affordable energy. The Coalition Government is taking immediate action to restore confidence in our energy sector and eliminate regulatory barriers that have hindered electricity generation and fuel imports," Brown stated.

Minister Jones emphasized the importance of New Zealand's natural gas resources, which have historically attracted new industries, created jobs, and supported key sectors of the economy. However, the recent energy shortages have threatened these industries, putting hundreds of jobs at risk.

"Oil and gas explorers need the confidence to invest in New Zealand, knowing they will continue to play a crucial role in the country's energy sector," Jones said.

The Ministers are set to report back to Cabinet in October with options for mitigating sovereign risk associated with LNG facilities and domestic gas production.