NZ considers bringing forward lift in fuel stocks

The New Zealand government is considering bringing forward plans to increase domestic fuel storage, following a jet fuel shortage earlier this month, a spokesperson for the energy minister said on Tuesday.

With the country depending entirely on imports since April, the failure of a recent shipment to pass quality tests resulted in shortages at Auckland Airport, the country's busiest. Airlines there were told in early December that jet fuel supplies would be reduced to just 75% of the originally planned allocation.

In response, Energy and Resources Minister Megan Woods had asked officials to look at requiring importers wholesalers to increase stocks beginning in 2023 instead of 2024, said the spokesperson, adding that Woods was now considering the advice.

The proposed regulation, announced in November, covers stocks of petrol, jet fuel and diesel. The government also plans to increase its own reserves of diesel.

Concerns over security of fuel supply have risen since New Zealand's only oil refinery closed in April, just as global energy prices were rising as a result of Russia's invasion of Ukraine.

In 2020 a panel independently reviewed the implications for fuel security if the refinery closed. Without crude oil and products kept in the country in relation to the refinery's operation, stocks would fall 30%, it found.

The regulated increase in stocks would ensure the country was holding enough diesel for 28 days, petrol for 28 days and jet fuel for 24 days.

The government estimated that, before the refinery's closure, stocks had been enough for 20, 26 and 17 days for those grades, respectively - not counting five days' of fuel held for and in the facility.

New Zealand consumed 5.9 million metric tonnes of oil product in 2021.

Bassam Maghzal, who specializes in infrastructure at New Zealand law firm Buddle Findlay, said the plan to increase stocks was an improvement and that risk had actually fallen now that supply was secured by multiple ship arrivals rather than production at one refinery.