Fuel security in New Zealand
Our fuel supply resilience remains critical to business operations across the economy and to social connections. The Government works closely with the fuel sector to ensure the fuel supply chain in New Zealand can manage domestic or international disruptions.
Liquid fuels like petrol, diesel and jet fuel are essential for industry, business, and New Zealanders’ day-to-day activities. The Government regularly commissions reviews of the fuel system to ensure we remain aware of any risks and can improve the security of our national engine fuel supply, for as long as it remains critical to our economy and wellbeing.
Although the likelihood is very low, a significant disruption to our fuel supply would affect all sectors and could cost the economy hundreds of millions to billions of dollars. It could also result in fuel shortages or price hikes. It’s critical the Government has clear oversight of risks and our fuel supply, and there is a contingency supply of fuel reserves onshore.
We're in regular contact with the fuel sector and work with them to ensure appropriate policies and measures are in place to reduce the impact of international and domestic oil supply disruptions.
Fuel resiliency policy package 2022
In 2022, the Government announced a policy package to improve New Zealand’s fuel supply resilience and economic security. This includes:
Minimum onshore fuel stockholding obligation
Improving fuel resilience monitoring
Government procurement of reserve stocks
Dedicating additional resources to the National Fuel Plan
Levy to fund fuel resilience initiatives
Streamlining the process to release reserve oil stocks
Reports on implications of Refining NZ’s conversion and mitigation options
The closure of Marsden Point Oil Refinery was one of the key considerations when the fuel resilience plan 2022 was developed. MBIE looked into the implications of the refinery’s closure, and commissioned the following reports from independent consultants Hale & Twomey in 2020.
Government Inquiry into the Auckland Fuel Supply Disruption
A Government Inquiry was commissioned after the Refinery to Auckland Pipeline was shut down for 10 days in September 2017 following the discovery of a leak. The pipeline supplies petrol, diesel and jet fuel from the Marsden Point Refinery to the Wiri Oil Terminal in South Auckland.
The outage led to the rationing of jet fuel supplied to Auckland Airport, flight cancellations and stock-outs of some ground fuels (mainly premium petrol) at a number of service stations in Auckland.
The purpose of the Inquiry was to draw lessons from the event to improve the resilience of fuel supply in the Auckland region.
The Inquiry made 21 recommendations in its report.
Study on Economics of Fuel Supply Disruptions and Mitigations
In 2019, we commissioned Market Economics to evaluate the economic impacts of a range of international and domestic (within New Zealand) fuel disruption scenarios, and to model the impacts of mitigation options (primarily storage options) in these scenarios. A report was produced from this study:
Petroleum Supply Security 2017 Update
In 2017, we assessed the resilience of the New Zealand petroleum supply chain. Our update provides the latest information on risks, particularly recent studies relating to tsunami risks.
We completed our 2017 update before the outage of the Refinery to Auckland Pipeline in September 2017.
Considering tsunami impacts and disruption events
We engaged independent consultants Hale & Twomey to update previous assessments. These previous assessments had informed the 2012 oil security review of the likelihood and impact of significant oil supply disruption scenarios. For more information, see the Oil Security Review 2012 below.
Our 2017 update:
- considers the potential impacts and contingency options for a major tsunami event that might affect multiple ports
- draws on Exercise Tangaroa 2016 and recent research. Exercise Tangaroa was a civil defence emergency management exercise. It simulated a magnitude 9.1 earthquake near the Kermadec Islands, which generated tsunami waves affecting the New Zealand coastline. The exercise highlighted the vulnerability of fuel supply infrastructure at Marsden Point, Tauranga, and several other coastal ports
- considers the role of Wynyard Wharf as a contingency option in a major disruption event in Auckland, in more detail than previous assessments.
International Energy Programme
New Zealand participates in the International Energy Programme to protect against disruption to international energy supplies. Developed by the International Energy Agency (IEA), the programme enables coordinated and collective action by requiring IEA countries to hold 90-day oil stocks.
Since 2007, we’ve met the 90-day oil stocks obligation through domestic commercial stocks and ‘ticket’ contracts for stocks held in other IEA member countries.
For more information, see New Zealand’s participation in the International Energy Programme.
Oil Security Review 2012
In 2011 and 2012, we commissioned 3 studies into New Zealand’s oil security. The studies assessed oil supply disruptions to:
- the domestic supply chain that can cause supply shortfalls and problems with fuel distribution
- international supply that can cause a spike in the global oil price, resulting in damage to New Zealand’s economy.
From these studies, we produced 3 reports:
1. A report evaluating options for re-establishing fuel supply to Auckland during a long-term fuel supply disruption: RAP contingency options [PDF, 837 KB]
2. A report recommending options to improve oil security, based on the cost of supply disruptions and the cost of measures to improve oil security: New Zealand Oil Security Assessment Update [PDF, 1 MB]
3. A report that summarises oil supply disruption scenarios, the direct costs of each disruption, and an estimate of the probability of each scenario: Information for NZIER Report on Oil Security [PDF, 634 KB]
Improving oil security through other measures
At a broader level, oil security can also be improved through measures like:
- increasing fuel mix diversity
- improving the fuel efficiency of the vehicle fleet
- encouraging greater use of domestic fuel supplies
- reducing demand for transport energy.
The Government and industry are pursuing these measures in different ways. The New Zealand Energy Strategy and the New Zealand Energy Efficiency and Conservation Strategy (NZEECS) outline a number of these measures.
For more information, see Energy strategies for New Zealand.