How the govt’s ban on oil and gas exploration has tightened supplies – and resulted in NZ importing 2m tonnes of coal

New Zealand  has   been   facing some of the most challenging energy market conditions in over a decade, with simultaneous shortages in natural gas and hydro-electric generation. The  consequence  has  been  sustained  high  wholesale electricity  prices,   creating issues for  electricity retailers without their  own  generating  capacity, to the point  where Electric  Kiwi – for  example – says it  is turning to  focus on  the Australian market.

Some  market-watchers  contend the  problems  trace  back  to  the  decision  of  the  Ardern  government to  ban  any  further  offshore exploration for oil  and gas.  That  drove  away   not  only  oil exploration companies   but also  the offshore  rigs   needed   to  complete  planned drilling  programmes.

Whether  that  is the  case  or  not, some  of  the  big generators  like  Contact  Energy  and  Genesis  are  said by  critics to  be  creaming  it – but  from  their  point of  view,  they  are   doing  their  utmost  to meet  the  high  demand  for  electricity.  Their  shareholders certainly  should be  happy   with the  healthy  margins  they are  reporting  while  wholesale  prices remain very  high.