Tuesday 14 December 2004

Oil security report released for comment

Energy Minister, Pete Hodgson, today released a report outlining options for improving New Zealand’s oil security. Comments are welcomed on the report by 2 February 2005.

The report, commissioned by the Ministry of Economic Development, found that approximately 500,000 tonnes of additional storage is required to ensure New Zealand is fully compliant with its obligation as a member of the International Energy Agency (IEA) to hold 90 days of oil stocks. The report also concluded that the cost of meeting this requirement would equate to less than one cent per litre at the pump.

"Our economy is heavily dependent on oil imports. New Zealand is at the end of a long external supply chain and has few immediately available supply alternatives. A significant disruption to international oil supplies, however unlikely, would have serious consequences for us," says Pete Hodgson.

"Having an adequate supply buffer to cover 90 days of imports is a sensible precaution to take. It is also my view that we should look seriously at holding more than this. Under IEA rules, holding more than 90 days of stocks would enable us to draw from them rather than introducing demand constraints in the event of a supply disruption.

“Cabinet has decided that oil companies should be responsible for providing adequate stocks, not the taxpayer. I'm keen to continue working constructively with oil companies to meet the 90 day reserve level as cost effectively and quickly as practicable."

The IEA was established by developed countries following the 1973 oil supply crisis to take a unified approach to coping with international oil supply disruptions. New Zealand joined in 1976.

The report is available at http://www.med.govt.nz/ers/oil_pet/oil-security/

ENDS

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