Deal to bolster diesel stocks

The government has signed a deal with Z Energy to secure an extra nine days of diesel supply to boost New Zealand’s fuel reserves and help shield the country from the global oil shock.

After a contestable procurement process, the coalition signed a letter of intent with the fuel provider on April 28 to procure 90 million litres of New Zealand-specification diesel.

The fuel will be delivered to Marsden Point, pictured, in Northland either as a single cargo or as two cargoes and will be held at the direction of the Crown.

Nicola Willis, Minister of Finance, and Shane Jones, Associate Minister of Energy, say the move is a “practical, forward-looking step that will help ensure New Zealand has more resilience at a time of global fuel market uncertainty”. 

“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,” adds Willis.

Jones notes the diesel supply will be in addition to the minimum stock holdings of fuel companies in New Zealand.

“Channel Infrastructure is working at pace to deliver a refurbished tank that can hold more than 90 million litres by early June,” he says. 

“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.”

Cabinet agreed in March on 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 says.

“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.”