ENERGY
August - September 2021
Self sufficiency déjà vu? New Zealand could be forgetting a hard-earned lesson about national self-sufficiency
T
he uncanny parallel between our wartime experience of the difficulty in ensuring vital supplies reached us from thousands of miles away with the present major disruption to our global logistics caused by the Covid pandemic, should give pause for thought. Our only oil refinery, producing 85 percent of the country's jet fuel and 67 percent of petrol and diesel, is to become an import terminal reliant on foreign suppliers. Our mandatory strategic fuel reserve of 90 days is reportedly only 20 days, with the balance held overseas. Any national security risk analysis recognising global supply problems must better justify this significant threat to our continued social and economic wellbeing. The loss of our only oil refinery means: 4
infrastructurenews.co.nz
• Dependence on availability from a variety of overseas suppliers. • Exacerbates the ban on new oil and gas exploration. • No capability to upgrade sub-standard imported product. • Inability to extend fuel reserves beyond our International Energy Programme (IEP) commitment of 90 days.
transport system, crippling international flights and dramatically highlighting our vulnerability. The transition of New Zealand’s transport sector from fossil fuels to efficient, cost-effective alternatives will realistically take years. Meanwhile, our fuel security is at risk, exacerbated by the uncertainty of future supply due to international
To navigate the present, we must heed the lessons of history • The loss of 240 skilled staff and impacting many skilled contractors. Memories are short: conflict in the Middle East saw oil prices soar and fuel supplies constrained for years. Damage to the pipeline supplying 90% of Auckland’s fuel and nearly 30 percent of New Zealand’s total fuel requirements, caused massive disruption throughout our
events beyond our control. Increasing local storage capacity is a longer-term challenge. Local chemical production in ageing and uneconomic facilities giving way to importing finished product from modern Asian and Middle Eastern ‘Super plants’ makes good business sense. Conversely, importing finished products also means a loss of valu-
able expertise as the skilled industry veterans needed to attract and mentor the next generation of much-needed professionals are no longer available. Covid constraints not only limit our ability to import the Chemical Engineers, Chemists and chemical industry experts we need. Those already here are finding it increasingly unattractive to remain, due in large part to constantly changing and frustrating border controls and immigration policies, coinciding with fewer job opportunities. Australia is decommissioning two of four refineries, leaving two operating for up to six years while additional fuel storage is built. These two will receive government subsidies worth A$2bn to upgrade in order to meet cleaner fuel standards and preserve thousands of jobs.
