Is the nation’s provide of petrol, diesel and jet fuel turning into extra susceptible to disruption? Sure, and no.
The federal government has recommendation that goes each methods, simply days forward of a vital resolution on stopping all oil refining right here.
Officers mentioned the recommendation just isn’t contradictory.
The Nationwide Social gathering mentioned the nation can’t trust within the “inconsistent” recommendation and the dearth of a authorities plan for power safety.
The nation’s solely refinery at Marsden Level close to Whangārei is poised to cease processing crude into completely different fuels, after almost 60 years, and switch as an alternative to importing readymade gasoline from subsequent yr.
Refining NZ has beneficial shareholders again this shift once they vote on 6 August.
Already, refining volumes have been lower, and the likes of roadmakers are grappling with how to make sure newly imported bitumen is as much as scratch.
The federal government is weighing up the dangers of the nation shedding all potential to make its personal petrol, diesel and jet fuel.
One report to the Ministry of Enterprise, Innovation and Employment mentioned this “would have a major impression on New Zealand’s gasoline safety”.
It listed eight methods it raises dangers.
However a second report, by the identical Wellington advisor, mentioned “it is not going to have a significant impression on gasoline safety”.
This second report recommended dangers might truly be lowered because it’s simpler to supply readymade gasoline than crude oil abroad.
The ministry mentioned it “does not agree that the experiences are contradictory”.
The primary report was excessive stage, whereas the second was “a extra complete and nuanced dialogue of the dangers”, it informed RNZ.
‘Cannot imagine’ variations – MP
Nationwide’s power and assets spokesperson Barbara Kuriger mentioned: “I simply can’t imagine how the 2 experiences have ended up so in another way.”
Consultants Hale and Twomey mentioned that for the second report, they interviewed main oil importers, and for the primary report they didn’t.
Their second report is 3 times longer – 50 pages – and price 10 occasions as a lot – $60,000.
“On cautious studying we stay snug with each experiences and their suggestions within the context of what we had been requested to do for every,” Ian Twomey mentioned in an electronic mail.
The primary report went into element concerning the eight threat components, whereas the second report both didn’t handle these, or mentioned they are often managed:
- The tip to the coastal oil tankers – which distribute Marsden Level’s merchandise – is a priority within the first report, however not within the second
- So too, for the dangers of readymade imports not being as much as normal; this may be handled, while not having a refinery, the second report says
- It doesn’t point out the chance of an finish to the native provide of sulphur for fertiliser
- or the lack of native abilities in oil processing
The nation will stay reliant on tankers – one arriving each two days – whether or not these usher in lots of crude, as now, or swap to only processed gasoline imports.
Nevertheless, the shift to import-only at Marsden Level would lower provides held in inventory, to about 20 days’ demand. The second report mentioned that’s considered acceptable, although it’s a lot lower than many international locations’ stockpile.
Most readymade gasoline can be imported from North Asia.
The report modelled disruption to that supply, say, from hurricanes or warfare.
It forecast it taking between three and 6 weeks to organise emergency provides, however mentioned that backup shares would hold any gasoline shortfall to a most of simply three days.
This presumes worldwide cooperation and the report didn’t mannequin a failure in regular world buying and selling exercise.
“On this case the lack of crude/refinery intermediate inventory would scale back New Zealand’s choices, as would the lack of the flexibility to at the least refine New Zealand’s home crude.”
Nevertheless, the expertise of Covid-19 confirmed gasoline use may very well be curtailed dramatically in an emergency, it mentioned.
The second report additionally recommended gasoline provide dangers might truly be lowered, as a result of the nation can be getting its gasoline from extra various sources offshore, as an alternative of counting on Marsden Level to refine two thirds of provides.
“This could take away refinery disruption … as a single level failure threat.”
Additionally, it was simpler to regulate the forms of gasoline imported, than to regulate refining right here – an added flexibility given further worth by the pandemic, when jet fuel has not been wanted a lot.
“MBIE is at present contemplating Hale and Twomey’s suggestions within the second report and plans to supply additional recommendation to the minister within the subsequent few months,” the ministry mentioned.
Nationwide’s Barbara Kuriger mentioned if the consultants had talked to the trade within the first place, their first report may not be so completely different from the second.
“If I used to be a minister, and I received two fully conflicting experiences, I would be asking the place the reality was,” she mentioned.
“I believe the reality might be someplace within the center.”
Hale and Twomey wouldn’t remark additional.
Nationwide couldn’t change industrial realities which made Marsden Level uncompetitive with Asian refineries, nevertheless it might plan higher to cut back power provide dangers, Kuriger mentioned.
“We’re turning into fairly power depending on the remainder of the world.”
The federal government lacked a plan.
“The phrase I get most frequently once I discuss to folks within the power sector is ‘uncertainty’.
“There is a large hole between now and when we’ll be completely dependable on our personal renewable power,” Kuriger mentioned.
The Marsden Level experiences reveal a basic drawback for the ministry making an attempt to handle gasoline inventory dangers: It’s reliant on knowledge that’s typically incorrect, and has been for years.
“The evaluation of the provision chain stock modifications was made tougher by the poor high quality of MBIE’s knowledge because of incorrect shares submissions by some trade individuals,” the second report mentioned.
Corporations weren’t penalised a lot for doing this, it mentioned.
The ministry should repair this, the consultants added.
Kuriger was unimpressed. “If you cannot measure it, you’ll be able to’t handle it,” she mentioned.