Labour on overturning LNG: ‘we’d need to see the contract’
9 Jun 2026
By Pattrick Smellie
An incoming Labour government later this year would need “to look at the contract” before deciding whether it would be bound by the current government’s commitment to a user-pays funded liquefied natural gas terminal.
Asked by Carbon News whether Labour would be bound by a contract that could be signed close to the date of the November 7 general election, Labour’s energy spokesperson, Megan Woods said: “Can’t say. We’d need to see the contract.”
Today’s LNG announcement repackaged the decisions announced in February, the only additional detail being that two parties are in the Request for Proposal process and that the government hopes to sign a contract “this year”.
The previous Energy Minister, Simon Watts, had targeted a contract signed this month, which would have made it difficult for an incoming Labour-led government to repudiate.
However, a contract that appeared to be signed in haste prior to an election could be another matter.
Labour, however, remains wary of being accused of repeating the ‘sovereign risk’ scare given to foreign investors when then Prime Minister Jacinda Ardern announced a ban on offshore oil and gas exploration, in 2018.
Woods also agrees with the problem that the LNG decision seeks to solve: the need for a thermal/fossil fuel to ‘firm’ the highly renewable NZ electricity system during sustained periods of dry winter weather, draining hydro lakes.
However, Labour believes the Huntly power station could fill the gap running on coal or bio-mass, with domestically produced torrefied wood pellets capable of doing the job.
The LNG announcement met with support from the country’s largest electricity users while renewables lobbyists insist it’s not a done deal yet.
Generator-retailers did not immediately issue statements and their share prices barely moved in the first two hours of trading on the NZX this morning.
A discussion document relating to a proposed new “Winter Energy Reliability Obligation”, more actively requiring generators to have dry year cover guaranteed was issued shortly after Brown’s announcement.
"The LNG terminal should effectively provide a soft cap on wholesale electricity prices during dry-year periods by ensuring additional fuel is available when hydro storage is low,” said the Major Electricity Users Group’s Jon Harbord.
It would also provide “an option for industrial and commercial gas users who continue to rely on gas," he said.
Rewiring Aotearoa’s Mike Casey said: “Nothing has been signed so there’s a chance the industry could convince the government LNG is not needed.”
“The government needs to recognise renewables, treated differently, absolutely can manage dry year risk in the longer term without burning fuels.”
Rewiring last week issued a report from economic consultants Sapere, showing that burning diesel and giving government grants for gas users to electrify would be cheaper than LNG.
The Greens’ co-leader Chloe Swarbrick said: “Luxon’s Government has committed to building a billion-dollar LNG import terminal without knowing how it will pay for it.”
The Greens have proposed a rooftop solar initiative capable of lending up to $150 million to households wanting to install solar generation panels, established as a government-backed lender supported by private sector partners.
“Power companies like Meridian have already been clear that we do not need this terminal,” said Swarbrick. “It is hard to see how the Energy Minister expects to convince the gentailers to volunteer to fund something they don’t see any economic or practical sense in.”
Total approximate costs for the facility are understood to be in the region of $1.4 billion, implying annual levy costs imposed on the largest generators as high as $145m, which Energy Minister Simeon Brown made clear today would not be disclosed as a levy at the level of the individual power company customer.
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Story copyright © Carbon News 2026