The New Zealand government announced plans to co-invest in new natural gas field projects as part of its 2025 budget, setting aside up to NZ$200 million (US$120 million) over four years to attract private sector interest and address declining domestic reserves.

Resources Minister Shane Jones confirmed the funding Thursday, stating the government is prepared to take a commercial stake of up to 10 to 15 percent in new gas developments. He said the initiative is a strategic response to dwindling supplies and aims to restore investor confidence following the recent lifting of a long-standing ban on offshore oil and gas exploration.

“We are already feeling the pain of constrained supply,” Jones said in a written statement. “We’ve demonstrated the potential for significant gas development, and while investors are keen, they need assurance that their commitment won’t be in vain.”

The announcement comes nearly a year after the ruling center-right coalition reversed a 2018 ban on offshore oil and gas exploration. That ban, initially introduced under a previous administration to support climate goals, had been a source of contention in energy and business sectors.

With the reversal, the government has emphasized the importance of energy security and economic resilience, particularly in light of international pressures and ongoing global trade disputes. Officials argue that domestic gas development is essential for supporting industries and households as renewable infrastructure continues to scale.

The co-investment strategy is designed not only to revitalize exploration activity but also to send a strong signal that New Zealand is open for energy investment. The government sees this as a way to ensure that new projects proceed without undue risk to private partners, particularly in an uncertain global environment.

In addition to the gas field funding, the budget reflected a cautious approach to public spending overall. Total new expenditures were set at their lowest level in a decade, as the government warned of a looming “trade shock” tied to global tariff escalations. Despite pressure to stimulate the economy, officials have prioritized fiscal discipline to preserve long-term economic stability.

The decision to support gas development marks a notable policy shift in New Zealand’s approach to energy. While the government maintains that it remains committed to emissions reduction targets, it also acknowledges the ongoing role of gas in the national energy mix during the transition to cleaner alternatives.

Jones said co-investment would help balance those goals. “We must be pragmatic. Energy security and economic development can—and must—go hand in hand.”