A methanol production plant that has been idle for seven years in Taranaki is to be restarted in what is being hailed as a boost for New Zealand's economy.
Methanex New Zealand and privately-owned Todd Energy announced on Wednesday they have signed a 10-year gas supply agreement.
Methanex says it expects to start methanol production in the middle of this year at its Motunui facility near New Plymouth and produce about 750,000 tonnes annually.
The Government says the project is likely to increase New Zealand's exports by $250 million a year and provide about 500 construction jobs.
The gas supplied by Todd Energy to run the plant will come mainly from the Mangahewa field in north Taranaki.
Todd Energy chief executive Paul Moore told Radio New Zealand's Checkpoint programme that research consultancy Berl has estimated the 25 new wells and 10-year supply deal will be worth up to $1.2 billion extra in royalties, payroll and other taxes to the Treasury.
Mr Moore says the wells will be drilled at five locations over about five years.