Major Gas Consumers Meet Minister to Address Supply Challenges

Big industrial gas users are set to meet with Resources Minister Shane Jones in Auckland on March 15, 2024, to address ongoing challenges in securing an affordable gas supply. The meeting comes as concerns grow over the availability and rising costs of gas, which are crucial for various industries, particularly fertilizer manufacturing.

One of the key players in this discussion is Ballance Agri-Nutrients, a major fertilizer manufacturer that utilizes gas to produce urea. The company has indicated that it may be forced to temporarily close its Taranaki plant due to difficulties in sourcing gas. The situation highlights a broader issue affecting several companies that rely heavily on this resource.

Len Houwers, spokesperson for the Major Gas Users Group, emphasized that Ballance is not alone in facing these supply challenges. He intends to engage with Minister Jones and other business representatives to examine the current dynamics of the gas market. Houwers pointed to the actions of electricity providers as a contributing factor to the struggles faced by industrial consumers.

According to Houwers, power companies have been able to pay higher prices for gas, thereby outbidding industrial users. A recent example of this trend was Contact Energy, which secured a seven-year gas supply contract after outbidding Ballance. This has left medium to large companies grappling with financial constraints as they seek to maintain operations.

In response to criticism, Contact Energy defended its actions, stating that the decision to claim the gas supply was made in the interest of the country. The power company argued that by securing this resource, it could better support hundreds of businesses and enhance overall energy security.

As this situation unfolds, the meeting between major gas users and Minister Jones could play a crucial role in shaping future policies and strategies related to the gas market, potentially impacting the broader industrial landscape. The outcome may determine how companies can navigate the challenges posed by diminishing gas supplies and rising costs, which are increasingly affecting their viability.