The Ministry of Business, Innovation and Employment (MBIE) will halt its efforts to procure reserve diesel stock and will explore alternative methods to bolster New Zealand’s diesel resilience, Associate Energy Minister Shane Jones announced.
In addition, the ministry will initiate changes to the minimum fuel stockholding (MSO) regime.
Legislation introduced in 2023 will require fuel importers to hold 28 days’ worth of petrol, 24 days of jet fuel and 21 days of diesel from January 1, 2025.
A proposal for the Government to investigate funding 70 million litres in reserve diesel stock and its storage was also committed to at the time. TransportTalk spoke to one major fuel retailer which warned of more pain at the pump for consumers if stockholding regulations were implemented.
“Procuring additional reserve diesel carries significant capital cost. Cabinet will need a robust understanding of options and their impacts before making decisions,” Jones says.
Jones highlighted the importance of a secure and resilient supply of engine fuels for the economy, noting that New Zealand’s reliance on imported engine fuels makes it particularly vulnerable to international and domestic supply disruptions.
“Ensuring New Zealand holds enough reserve stocks to ride out disruptions is a key pillar of fuel security, and while the risks of supply disruptions are low, the consequences of a severe and sustained disruption would be significant,” he says.
MBIE will seek public input on the appropriate level of cover for New Zealand’s diesel stock and the options for achieving this through a discussion paper to be released later this year.
The announcement builds on a work programme aimed at bolstering New Zealand’s fuel security which includes commissioning a study into the country’s fuel security requirements and collaborating with industry to enhance jet fuel resilience at Auckland Airport.
Cabinet measures to improve fuel security
Cabinet has agreed to the following measures to support improving New Zealand’s fuel security:
- Policy decisions needed to finalise information disclosure regulations to support the minimum fuel stockholding obligation. This includes:
- changes to the information disclosure regulations to minimise compliance costs to fuel importers by allowing stock in the Marsden Point to Auckland pipeline and at jet fuel refuelling facilities above 1 million litres to be counted towards minimum stockholding obligation requirements.
- changes to how information is verified to reduce costs to fuel importers. An internal assurance statement from the company’s board will now be accepted rather than needing to supply an annual independent audit.
- Stop work on investigating government procurement of 70 million litres of reserve diesel stock (the equivalent of seven days of normal use) and its storage and management through a long-term lease agreement.
- Investigate other options to increase New Zealand’s diesel reserves from 21 to 28 days’ cover.
