Domestic Price of Natural Gas

IBISWorld forecasts the domestic price of natural gas to fall by 2.8% in 2023-24, to 97.2 index points. Despite supply conditions improving marginally, they are likely to remain tight over the year, causing gas prices to remain. However, declining energy commodity prices in global markets, including liquefied natural gas (LNG), oil and coal, are anticipated to place downward pressure on domestic gas prices over the year.

New Zealand’s natural gas is primarily sourced from the Taranaki region on the West Coast. Gas supply has declined over the past five years as major gas fields, such as Pohokura, Kupe and Maui, have matured. Gross gas production in New Zealand has fallen from 181.87 petajoules (PJ) in 2018-19, to 148.04 PJ in 2022-23 (latest available data). Declining gas supply has placed upward pressure on gas prices over the past five years. Further, in April 2018, the Central Government (Te Kawanatanga o Aotearoa) introduced a ban on issuing new offshore oil and gas exploration permits, which has constrained exploration activity and gas supply over the period. New Zealand does not import or export natural gas. As a result, domestic natural gas prices are partially insulated from fluctuations in global gas prices. However, prices are still influenced by supply and demand conditions for substitute energy products in global markets, such as oil and coal. Global oil, coal and LNG prices have all grown strongly over the past five years, with supply constraints due to the Russia-Ukraine conflict anticipated to cause global energy prices to rise.