Oil Emergency Response Strategy

The purpose of the Oil Emergency Response Strategy is to help minimise the effects of a petroleum supply disruption on New Zealand, and to help New Zealand meet its obligations as a member of the International Energy Agency.

The emergency measures contained in the strategy will only be considered in a severe oil supply disruption situation, and only when an industry response is considered insufficient. They will not be implemented where the primary purpose is to manage prices or to assist particular suppliers.

What types of emergencies are covered by the strategy?

The strategy focuses principally on international disruptions to oil supplies or to disruptions that require a national response. For local or regional emergencies, Civil Defence plans would usually take precedence. 

What are New Zealand's obligations under the International Energy Agency's International Energy Programme Agreement?

The International Energy Programme Agreement requires International Energy Agency (IEA) countries to hold oil stocks equivalent to at least 90 days of net imports of the previous calendar year and to release oil stocks, restrain demand, switch to other fuels, increase domestic production and, if necessary, share available oil, in the event of an oil supply disruption of seven percent or more to the IEA or individual countries. 

Is New Zealand meeting its IEA obligations?

Yes. As a member of the IEA New Zealand has an obligation to hold emergency petroleum stocks equivalent to 90-days of net imports. New Zealand is in full compliance with this requirement.

The majority of New Zealand's stocks are held on a voluntary or commercial basis, with the balance in the form of government held "ticket contracts", which provide the Government with an option to purchase petroleum in the event of an IEA-declared emergency. 

What's an example of an oil disruption that triggers these IEA measures?

During Hurricane Katrina oil supplies were disrupted to the extent that the IEA declared an oil emergency. As a member of the IEA, New Zealand was called on to reduce imports of petrol and diesel during September 2005, which was done by reducing stock levels and reductions in public demand at the government's request. An oil supply disruption has to be significant before the IEA declares an emergency. 

What types of non-IEA scenarios could result in the Minister activating the strategy?

Where a domestic event had the potential to result in nationwide implications for domestic oil supplies, it may be considered appropriate to work with industry to manage the effects of that event. For example: the loss of the Marsden Point refinery; the loss of the Refinery to Auckland pipeline; or as part of managing the after-effects of a civil emergency or natural disaster.

The primary responsibility for responding in an emergency lies with industry. The government's role is normally coordination unless the severity of the situation warranted the use of regulatory powers. 

Can the strategy be activated to manage the effects of high oil prices?

No, the strategy deals only with the effects of a disruption to oil supplies. It is also not meant to resolve issues affecting only one company.