The Government has signed a “letter of intent” with Z Energy to procure 90 million litres of diesel, which is the equivalent of an additional nine days’ supply.
The fuel will be delivered to Marsden Point, either as a single cargo or two cargoes. It will be stored here in a refurbished tank, which is expected to be available for use from early June.
While negotiations on the final details are ongoing, the intention is for the fuel to be at Marsden Point by late June.
Z Energy was selected after a contestable procurement process. It provided the strongest value for money and greatest flexibility for when and how the fuel can be used, the Government said.
The cost of the deal is commercially sensitive, but the Government said the economic benefit and the security it will provide New Zealand outweigh the upfront costs.
Finance Minister Nicola Willis said the Crown’s exposure to any long-term fall in fuel prices will be limited under this deal and it will be held at the direction of the Crown.
“This is a practical, forward-looking step that will help ensure New Zealand has more resilience at a time of global fuel market uncertainty,” she said.
“It strengthens both our fuel and economic buffers and reduces the potential impacts of international supply disruptions from the ongoing conflict in the Middle East.”
The additional 90 million litres of New Zealand-specification diesel is equivalent to about nine days of national supply, or 550,000 barrels.
Resources Minister Shane Jones said Channel Infrastructure is working at pace to deliver the refurbished tank.
“The Government earlier this month signed off an investment of up to $21.6 million from the Regional Infrastructure Fund to acquire this extra capacity.”
Jones said Z Energy’s proposal “delivered the strongest overall advantages, providing value for money alongside practical flexibility around how and when the additional fuel could be used”.
“Z Energy will procure, own and manage the volume of diesel under the agreement but the Crown will control its release into the New Zealand market.”
The additional supply will not count towards the fuel companies’ minimum stockholding obligations, the Government said.
Yesterday, the Ministry of Business, Innovation and Employment released the country’s latest fuel stock data, with a slight decrease across all fuel types since the previous update.
As of April 22, 51.8 days of petrol, 41.3 days of diesel and 45.7 days of jet fuel were either in the country or on the way.
Yesterday’s update said petrol stocks have decreased by 0.4 days since then, diesel was down by one day and jet fuel has fallen by 1.7 days.
The ministry said “total national fuel stocks continue to be sufficient across petrol, diesel and jet fuel, and remain within normal operating ranges”.
“Although total diesel stocks are lower, diesel held in New Zealand and within the Exclusive Economic Zone is at its highest level since the Middle East conflict began.
“These fluctuations are typical of normal international shipping operations. Overall movements remain within expected ranges and show normal patterns.”
Speaking to media yesterday, Regulation Minister David Seymour and Transport Minister Chris Bishop said the Government was assessing whether to refine some vehicle regulations that make it harder for businesses and communities to cope with global fuel shocks.
Among the regulatory barriers the Government was looking at were allowing some heavy vehicles to carry more weight per trip to improve fuel efficiency, easing weight thresholds for zero-emission vehicles, and relaxing time and access restrictions for over-dimension vehicles.
All options were being developed to be implemented quickly if the Government moved to Phase 2 of its National Fuel Response Plan and were expected to be ready by the end of this month, if needed.
But NZ First leader Winston Peters said on Tuesday he was “for using rail”.
“I’m not for these changes. These changes or these weight limits are put there for good reasons because of potholes and bridge strengths, and what have you,” he said.
“All of a sudden, they’re going to change it when they seize a chance to use the crisis to try to get the law changed. They’ve been trying for the last 30 years. No, we are not going to go down that pathway.”
He wasn’t clear on whether he would seek to stop the changes at Cabinet.
Peters, who is the Rail Minister, said rail was “much more efficient” and “it’s back on track big time”.
Adam Pearse is the Deputy Political Editor and part of the NZ Herald’s Press Gallery team based at Parliament in Wellington. He has worked for NZME since 2018, reporting for the Northern Advocate in Whangārei and the Herald in Auckland.