Govt Expands $200M Gas Security Fund to Tackle Energy Crisis and Boost Supply

“There remains a strong perception of sovereign risk in New Zealand’s petroleum sector,” noted Minister Bishop.

In a major move to shore up New Zealand’s energy resilience, the Coalition Government has expanded the scope and terms of the $200 million Gas Security Fund, allowing for broader investment strategies aimed at securing short-, medium-, and long-term gas supply. The goal: to reduce rising electricity costs, safeguard industrial energy users, and address investor hesitancy caused by prior policy shifts.

The announcement was made by Resources Minister Shane Jones and Associate Finance Minister Chris Bishop, who emphasized the urgent need to reverse the decline in gas reserves and restore energy market confidence.

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Broader Investment Scope to Meet Energy Security Challenges

Originally created to support new gas field developments, the Gas Security Fund has now been retooled to support a diverse range of gas-related investments, including:

• Short-term projects: Additional drilling in existing gas fields, upgrades to current production facilities

• Medium-term projects: Exploration and appraisal of underdeveloped or marginal fields

• Long-term initiatives: Greenfield exploration, including regions beyond Taranaki

• Gas storage infrastructure: Recognizing the role of strategic storage in stabilizing supply and balancing seasonal demand

“As our gas reserves dwindle, a growing gap is emerging in our energy system, driving up electricity prices and threatening gas-dependent industries,” said Minister Jones. “We must invest now—not just in the future, but in immediate incremental improvements.”

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Addressing Investor Confidence and Perceived Sovereign Risk

The expansion of the fund also seeks to counteract the lingering effects of the previous government's ban on new petroleum exploration outside onshore Taranaki, which created a chilling effect on investor sentiment.

“There remains a strong perception of sovereign risk in New Zealand’s petroleum sector,” noted Minister Bishop. “Our revamped fund offers flexible commercial structures to attract private investment and rebuild confidence.”

Cabinet has mandated that each investment proposal undergo legal and expert scrutiny to ensure compliance with both domestic laws and New Zealand’s international climate commitments. Investment structures will be customized on a case-by-case basis, with options ranging from direct equity to public-private partnerships.

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Local Benefits and Economic Development

In addition to energy security, the fund is designed to deliver regional economic benefits. It will actively encourage:

• Local procurement of goods and services

• Employment of New Zealand-based workers

• Collaboration with iwi and regional communities

The fund will be jointly administered by the Ministry of Business, Innovation and Employment (MBIE) through Kānoa – the Regional Economic Development and Investment Unit, with final investment decisions made by the Minister of Resources and the Associate Minister of Finance, supported by an independent advisory panel.

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Expressions of Interest to Open Soon

Kānoa is set to issue a formal call for expressions of interest later this month, with ministers eager to move swiftly to support investment-ready projects.

“We are standing alongside our gas sector to deliver the energy New Zealand needs,” the Ministers stated. “We urge all parties to be pragmatic about the role of natural gas in keeping energy affordable and reliable as we transition to a lower-emissions future.”

The revamped Gas Security Fund comes at a time when the risk of de-industrialisation in regional New Zealand is growing, and energy affordability is a mounting concern for households. Through this initiative, the Government hopes to secure a stable, affordable energy supply while transitioning to more sustainable alternatives in the long run.