The Government has secured an additional nine days’ supply of diesel to boost New Zealand’s fuel reserves and help shield the country from the global oil shock.
Following a contestable procurement process, the Government has signed a letter of intent with Z Energy to procure 90 million litres of New Zealand specification diesel.
Under the terms of the deal:
- the fuel will be delivered to Marsden Point either as a single cargo or as two cargoes
- the Crown's exposure to any long-term fall in fuel prices will be limited; and
- the fuel will be held at the direction of the Crown.
Finance Minister Nicola Willis and Associate Energy Minister Shane Jones said this is a practical, forward-looking step that will help ensure New Zealand has greater resilience amid global fuel market uncertainty. It will strengthen both the fuel and economic buffers and reduce the potential impacts of international supply disruptions from the ongoing conflict in the Middle East.
Jones said the diesel supply, which will be in addition to the minimum stock holdings of fuel companies in New Zealand, will be stored at Marsden Point in Northland.
Channel Infrastructure is working at pace to deliver a refurbished tank that can hold more than 90 million litres by early June.
The Government, earlier this month, signed off on an investment of up to NZD 21.6 million from the Regional Infrastructure Fund to acquire this extra capacity.
In March, Cabinet agreed a strategy to strengthen fuel supply resilience, including seeking commercial proposals from fuel importers. The Ministry of Business, Innovation and Employment ran a competitive procurement process, inviting fuel importers to submit their proposals to supply additional fuel.
“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,” Jones added.
“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.
Nicola Willis mentioned that while the current fuel system continues to serve the country well, additional fuel provides strategic insurance for keeping the economy moving.
“Reliable fuel supply is essential for households and businesses. We have prioritised securing additional diesel because it is the fuel that drives the economy," she said.
“We are taking a measured, responsible approach and believe this agreement, alongside the other work the Government is doing, will help strengthen our fuel security and give reassurance to Kiwis.”
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