Gas is the life blood in the production of vital building products, says the industry. File photo. Photo: 123RF
The building industry wants the government to take gas supply from NZ's biggest user and redistribute it to local manufacturers, but the resources minister says Methanex is already playing its part.
Building Industry Federation chief executive Julien Leys says the country is dealing with a slow-motion energy crisis that could collapse vital supply chains and push construction costs up even further, and gas used by Methanex needed to be redistributed.
He says gas is the life blood in the production of vital building products, and rising energy prices could force more businesses to close.
MBIE figures show natural gas reserves are down 27 percent compared to last year.
Meanwhile, 765 construction companies went into liquidation in the past year, according to the latest Centrix Credit Indicator, up 46 percent on the previous year.
The Methanex plant in Waitara Valley. Photo: Google maps
Leys told Checkpoint that taking gas from Methanex for redistribution was a controversial move, but it was necessary.
"We're seeing the consequences of closures already happening. This stuff is real, it's impacting us now and we need a plan, but we don't have one."
About 45 percent of New Zealand's gas supply is consumed by Methanex to produce methanol, most of which is exported overseas, according to the Energy Authority.
"They have nearly half of all our gas," said Leys. "At the moment that's exported cheaply for methanol.
"We need to reallocate that in the same way that other countries did when they had similar crises. In Europe they did a reallocation of gas to strategic industries. Our building and construction industry is strategic, because without those industries being kept alive, we're going to have an even worse housing crisis and more expensive material costs."
He said the gas should be reallocated to where it can have more value.
"We can ring fence those domestic manufacturing needs to keep them going, and we can actually have a clear transition plan for all of our industries to eventually move through to electrification."
He said while Methanex might have a contract to take the gas, this was actually a national security issue.
"The value that our manufacturing industry delivers and the loss of that would be far more significant and outweigh anything that Methanex brings in through its exports.
"So it needs the direction of government to make a decision that says 'look, we are going to take a portion of that gas and relocate it to keep those building material industries alive and keep those jobs.
"Gas isn't just about energy, it's jobs, housing and economic survival."
He said the situation will only get worse if the government does nothing.
"I think we'll see higher costs, I think we'll see manufacturing businesses either shutter for a large part of the year or even close, and if they close I don't think we'll get them back. I think we'll lose more skills as well and I think we'll lose the local supply of essential building materials, and we'll become dependent on importing everything."
But Resources Minister and Associate Energy Minister Shane Jones said Methanex was already playing its part in helping with the issue.
"Nearly all of the gas that we've had access to when we've needed to make reduction have already been borne by Methanex," Jones told Checkpoint
He said he was personally in favour of a rationing of the gas if needed.
Resources Minister and Associate Energy Minister Shane Jones Photo: RNZ / Mark Papalii
"Whilst we are confident there will be more gas coming onstream, it will need a plan signed off by Cabinet, and at this stage we don't have the proposal in front of us."
He said Methanex were not the bad guys in this situation.
"They have been doing the heavy lifting to keep this flowing to other sources of energy production for industrial purposes already."
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