The latest shipment of crude oil is on its way to New Zealand – the country’s only refinery set to close.
The arrival of the Torm Ingeborg at Marsden Point this weekend is the beginning of the end for Refining NZ.
Carrying 90,782 metric tonnes, it will be the last vessel to deliver crude oil here, with the refinery shutdown due to begin in a few weeks.
Energy Minister Megan Woods said despite global uncertainty over oil following Russia’s invasion of Ukraine, the government was not reconsidering the refinery’s future.
“Of course we have asked the question whether there are new threats to New Zealand’s security of supply as a result of what is happening around the world,” she told Checkpoint. .
“All the advice we’re getting is that there’s no threat to New Zealand’s oil supply.”
Woods took part in a meeting of 30 energy ministers at the International Energy Agency this week, which agreed to release 60 million barrels of oil (currently held in reserve), mostly in Europe.
She said the supply would not affect New Zealand’s physical supply and security because we don’t get oil from Russia.
“Most of the refineries in Southeast Asia, where we’ll be sourcing gasoline from, don’t use Russian crude.”
Instead, Woods said the release was aimed at stabilizing prices and reassuring markets of abundant supply.
She was seeking advice from oil companies, the Department for Business, Innovation and Jobs, independent consultants and international counterparts on the matter.
But keeping the refinery open was not planned.
“For us to be able to refine oil here, crude also has to come through – and it’s crude that’s setting the price right now – so whether it’s from a physical supply or a price, the argument doesn’t really fit there.” she said.
Despite assurances, not everyone was convinced that we were seated properly.
The Sustainability Council’s executive director, Simon Terry, said New Zealand had long supply lines for fuel delivery and yet it kept much lower fuel reserves than other countries.
New Zealand typically only has 20 days worth of diesel stored ashore, he said.
“Until we decarbonize trucking a bit, only diesel can keep food on supermarket shelves.”
Keeping the refinery running would provide a way to ensure a minimum amount of fuel on a perpetual basis, to keep essential services running, he said.
Russia is the world’s second largest oil exporter and although Terry said the invasion of Ukraine was already having an effect on oil markets, it highlighted the threat of tankers stopping traveling here and the cost of the closure of the refinery.
There were also concerns about how the oil we have access to will be transported across the country.
Craig Harrison of the Maritime Union said countries were already securing their supply chains, including tankers.
“If we look at the size of New Zealand and our location, we are miles away from some of the refineries that we source fuel from.
“As we’ve seen with our supply issues in our container fleets, once they’re constrained, prices go up quite quickly.
Harrison said New Zealand would depend on oil companies to charter vessels to transport the fuel – and feared there hadn’t been much testing of how their plans would work.
“We’ve just seen some light docs put out by Z (Energy), but there’s nothing to really review them – so we have quite a bit of concern actually.”
Refining New Zealand is expected to wrap up operations by the end of the month, before taking the form of Channel Infrastructure, which will only store refined fuel.