Methanex to Halt NZ Production Indefinitely over Gas Supply Uncertainty

(Update) September 4, 2026, 8:40 AM GMT: Updated with comment from New Zealand's MBIE.

Methanex Corp said Tuesday it expects to indefinitely close production in New Zealand from next year after selling its natural gas supply entitlements.

"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 optimize value from its remaining New Zealand gas position", the Vancouver, Canada-based methanol supplier said in an online statement.

"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".

Methanex signed an agreement to offload gas purchases due to be delivered to the company from 2027 to 2030.

"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", president and chief executive Rich Sumner said. "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.

"We are now focused on supporting our team members during this transition period, safely 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".

According to Methanex's report for the second quarter published July 28, one of its two facilities in New Zealand has already been idle.

In April-June, Methanex had an operating capacity of 215,000 metric tons and production of 46,000 metric tons in New Zealand. "Production was lower in the second quarter as we took a planned winter outage to supply gas to the New Zealand electricity sector", Methanex said. "The plant was restarted in July and is operating at reduced rates.

"Future production in New Zealand will be dependent on the performance of existing wells, future upstream development and any on-selling of gas into the electricity market to support the country's energy needs".

New Zealand's Ministry of Business, Innovation and Employment (MBIE) told Rigzone it rezognizes "there are employees, contractors and families impacted by this decision".

"Methanex's exit creates additional headroom in the gas market, but it does not change the underlying challenge that domestic gas production is expected to decline over time", the ministry added.

"The government has taken action over the last three years to increase gas supply and support industries anticipating the need for alternative energy.

"MBIE has a range of work underway focused on improving New Zealand's long-term gas security. This includes exploring new gas development and storage options, the Gas Security Fund, procuring an LNG facility, improving market transparency and advancing options to strengthen security of supply".

A confidential document from the ministry dated August 24, which has now been made public, warned Methanex's impending exit would "materially change supply and demand dynamics, reduce energy system flexibility and could have significant consequences on other large users' ability to secure gas".

"Methanex's exit is closely linked to the pending closure of OMV's Maui gas field, with both changes expected within the next 12 months", the document said.

In July the government announced the award of the first oil and gas exploration license in New Zealand since Prime Minister Christopher Luxon's administration last year reversed a 2018 ban under his predecessor, Jacinda Ardern. Australia's EnZed Energy Pty Ltd received a 12-year permit covering around 546 square kilometers in the offshore portion of Taranaki, which remains New Zealand's only hydrocarbon-producing region.

"With existing gas fields maturing, exploration remains an important part of understanding New Zealand's future energy options", the government said in a statement July 29. "As at 1 January 2026, New Zealand's proven and probable natural gas reserves had declined 23 percent from the previous year to 731 petajoules - the lowest level since records began more than two decades ago".

To contact the author, email jov.onsat@rigzone.com