This Dec 22, 2019 file photo shows the northern end of Lake Wakatipu in New Zealand where several scenes from the Lord of the Rings movies were filmed. (MALCOLM FOSTER / AP)

WELLINGTON - The New Zealand government will no longer proceed with part of the deal to support The Lord of the Rings TV series, Economic Development Minister Stuart Nash said on Friday, following the decision by Amazon Studios to shift production of future seasons to Britain.

Amazon Studios announced earlier that its untitled The Lord of the Rings original series will film Season 2 in Britain.

The previously agreed MoU with Amazon Studios will no longer proceed in its current form. The 5% incentive previously offered on top of the standard 20% rebate for all international film productions is withdrawn.

 Stuart Nash, economic development minister, New Zealand

The shift from New Zealand to Britain aligns with the studio's strategy of expanding its production footprint and investing in studio space across Britain, with many of Amazon Studios' tentpole series and films already calling Britain home.

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Nash said he was disappointed by Amazon Studios's decision.

"The previously agreed Memorandum of Understanding (MoU) with Amazon Studios will no longer proceed in its current form. The 5-percent incentive previously offered on top of the standard 20 percent rebate for all international film productions is withdrawn," he said.

As with every other international production, Amazon Studios is eligible for a 20-percent rebate on its qualifying production expenditure in this country, under the terms of the International Screen Production Grant, according to him.

In this Oct 26, 2012, file photo, some of the costumes, props and memorabilia created for the The Lord of the Rings and The Hobbit movies are displayed in a mini-museum at Weta Cave in Wellington, New Zealand. (NICK PERRY /AP)

It is estimated that Amazon Studios' qualifying local expenditure totals around 663.74 million New Zealand dollars (around US$467 million) so it could potentially be eligible for a 132 million New Zealand dollar rebate under the 20-percent rule.

The highly anticipated The Lord of the Rings series recently wrapped principal photography on Season 1 in New Zealand and is scheduled to premiere on Prime Video in more than 240 countries around the world on Sept 2 next year

"The international film sector is incredibly competitive and highly mobile. We have no regrets about giving this production our best shot with government support. However, we are disappointed for the local screen industry. Work will continue across government on ways to keep supporting the sector," Nash said.

Amazon Studios Vice President and co-head of TV Vernon Sanders thanked the government and people of New Zealand "for their hospitality and dedication and for providing The Lord of the Rings series with an incredible place to begin this epic journey."

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Amazon Studios COO & Co-Head of TV Albert Cheng said Amazon won't actively pursue the Season 1 MoU 5 percent financial uplift with the New Zealand government or preserve the terms around that agreement.

The highly anticipated The Lord of the Rings series recently wrapped principal photography on Season 1 in New Zealand and is scheduled to premiere on Prime Video in more than 240 countries around the world on Sept 2 next year.

As a world-renowned literary work, and winner of the International Fantasy Award and Prometheus Hall of Fame Award, The Lord of the Rings was named Amazon customers' favorite book of the millennium in 1999 and Britain's best-loved novel of all time in BBC's The Big Read in 2003.