Government seeking feedback on increasing diesel reserves

The government wants feedback on whether the minimum stockholding requirements for New Zealand's fuel supplies are enough, or whether they should be extended.

Under legislation passed by the previous government, from 1 January 2025, importers will be required to hold 28 days' cover for petrol, 24 days for jet fuel and 21 days for diesel.

But Associate Energy Minister Shane Jones was concerned that 21 days for diesel was not enough, and wanted to see whether diesel reserves could be extended to 28 days.

The government has gone out for feedback on four options to increase the diesel reserves.

• Option one was the status quo, with the minimum stockholding obligation remaining at 21 days;
• Option two was the extension to 28 days (roughly 70 million litres of additional diesel);
• Option three was crown procurement of diesel and its storage, either partly or fully funded by the Petroleum or Engine Fuels Monitoring Levy;
• Option four was to increase the minimum stockholding obligation but with government support, such as grants.

"We need to hold enough diesel onshore to keep essential goods moving through the country and vital services running, even if fuel supply chains have been disrupted," Jones said.

Jones is also taking a plan to Cabinet that would mandate increases to jet fuel capacity near Auckland Airport.

He said little progress had been made in increasing jet fuel holdings near the airport, despite the 2019 government inquiry into the 2017 Auckland fuel supply disruption recommending it.

"New Zealand found out the hard way in 2017 when jet fuel supply was disrupted, forcing planes to be diverted and reducing our connection with the world. Further issues with jet fuel quality in 2022 reinforce the need for action," he said.

He said reserves were important at times of disruption, given New Zealand imports nearly all of its fuels.

"Ensuring we hold enough reserve stocks in the right place to ride out possible disruptions is a key pillar of fuel security. It is a critical insurance policy needed to safeguard against the potentially devastating impacts that a severe and sustained fuel disruption might have."