War underlines risks of NZ's new fuel import regime: Save our Tankers campaign

Oil companies' new model for importing NZ's fuel supply has big risks claims campaign. Photo / File

Russia's war on Ukraine highlights how New Zealand's fuel supply could be threatened under oil companies' new model for importing our fuel, say campaigners trying to alert the Government to potential risks ahead.

Vessels that could be expected to bring in New Zealand's fuel supply under the new system could be snapped up during war by other countries for use as emergency floating fuel storage, says the Maritime Union, part of a campaign for a rethink on oil companies' new regime for fuel importing when Marsden Point ceases processing crude oil.

The union, the Merchant Service Guild and Aviation and Marine Engineers Association, are meeting with Cabinet ministers to raise the risks they see in the oil companies' intention to drop two New Zealand-flagged coastal oil tankers from April, in favour of bringing in finished fuel on dozens of foreign vessels.

Termination of the two big tankers means the loss of around 100 jobs.

But the campaign Save our Tankers has also raised the spectre of an insecure fuel supply, the potential for fuel quality and storage issues, and congestion and unloading delays at ports similar to those afflicting container ships.

A Z Energy report says a total of 175 vessels could be calling around the country a year discharging fuel.

The campaign is calling on Z Energy, Mobil and BP to retain the coastal tankers at least until the new regime is proven, and as mobile fuel storage facilities.

Maritime Union of New Zealand national secretary Craig Harrison said the Government was "just starting to get the picture".

"I think they've been so focused on other things like Covid and the supply chain, we've been left to accept the oil companies' word this is going to work all right."

Campaigners have met Finance Minister Grant Robertson and Transport Minister Michael Wood, and are seeking a meeting with Energy Minister Megan Woods.

There are also major issues about the plan that need to be addressed under civil defence legislation, Harrison said.

The National Fuel Plan, signed off by National Emergency Management Agency and the Ministry of Business, Innovation and Employment (MBIE) covers Marsden Point. Petrol, diesel, aviation and marine fuels are considered essential for everyday life and the economy. They are identified as "critical" resources in an emergency.

Harrison said the national plan requires Marsden Point to hold around 245 million litres of crude oil and 175m litres of refined product (petroleum 75m litres, diesel 60m, jet 35m).

"Under the International Energy Agreement, New Zealand as a member is required to hold 90 days of cover for fuel. Currently we have 60 days including crude ... and then, as required, hold about 30 days in contracts offshore.

"Once the crude stocks are no longer stored in New Zealand (175m litres) the Government will be required to hold more coverage as this stock is lost so it would need to add to the 30 days already held.

"Our view is that it makes sense to keep the tankers to reduce our exposure to more cost to New Zealanders by the oil companies keeping the tankers on the coast."

MBIE is publicly consulting on fuel storage. Submissions close on February 28.

Harrison said when tourism started up again the fuel requirement would rocket.

"It's madness to build new storage around New Zealand when we're going for carbon neutral and we have two tankers as storage - flexible storage - here."

The port sector has dismissed concerns about congestion but is monitoring the new model plan.

The campaign, which claims the South Island will be particularly vulnerable, wants the Government to direct Coastal Oil Logistics Ltd (COLL), a joint venture by the three oil companies which hires the two New Zealand-flagged tankers from Silver Fern Shipping, to retain the vessels for now. Silver Fern is owned by an Australian company.

It has not responded to Herald approaches.

COLL declined to respond to questions about why the two vessels had to go and whether it would consider retaining them.

Harrison said ports earned money from ship visits so were happy to have more.

But most ports had just one fuel unloading manifold, he said. If three ships from three different oil companies arrived at once, there would be delays in unloading, with the potential for extra charges.

Craig Harrison, Maritime Union of New Zealand national secretary.

Auckland's fuel will continue to be delivered by the Marsden Point to Wiri pipeline, while other areas will get their fuel delivered by tankers of varying size at regional ports.

Ports of Auckland doesn't take fuel tankers.

"We've said to [Auckland] you might not have to have fuel tanks but you should have some emergency provision there - a manifold at a berth that could switch fuel on to trains to cart across to Wiri. They have no interest in that," said Harrison.

Regrettably, given New Zealand's history of earthquakes and vulnerability to natural disasters like tsunamis, "we just don't seem to plan any resilience here".

Z Energy was the only one of the three oil companies to provide information about the new regime - but even that was too vague, Harrison claimed.

The security of the Marsden Point to Wiri pipeline had been raised with ministers, he said.

"That pipe has a finite life, what is the plan when that is over?"

Refining NZ, in a statement to the Herald, said the pipeline, built in the mid-80s and "well maintained since" would remain a critical part of the fuel supply chain under the new business model.

"The Refinery to Auckland Pipeline (the RAP) is the lowest carbon-emissions-intensive way for fuel to travel to where it is needed most – the Wiri fuel terminal in South Auckland, and from there, on to Auckland airport.

"Our transition to an import-only fuel terminal will remove the single point of failure risk associated with our current manufacturing operations, which currently produce c. 70 per cent of New Zealand's transport fuels on New Zealand's fuel supply chain."

Marsden Point could handle a large range of vessels, could reload vessels to supply other ports, and was in one of New Zealand's lowest seismic activity regions.

"Our large storage facilities become part of an integrated supply system in New Zealand, which is managed by the oil companies, and can quickly be reconfigured to manage disruptions impacting other parts of the supply chain if necessary."

Refining NZ, to be renamed Channel Infrastructure, said its surveillance and maintenance regime included frequent assessments of the pipeline and land surrounding the route of the RAP.

"This includes undertaking regular in-line (internal) inspections to check the integrity of the pipeline, and monthly surveillance flights over the RAP to check for any above-ground activity that may cause concern. The Government undertook an inquiry into the 2017 disruption (rupture) incident and Refining NZ have implemented all recommendations directed to us following this inquiry."