3 Mar 2022

Final shipment of crude oil on its way to Marsden Pt refinery

From Checkpoint, 5:52 pm on 3 March 2022

The final shipment of crude oil is on its way to New Zealand - with the country's only refinery about to close.

Marsden Point oil refinery

 Marsden Point. Photo: 123rf.com

The arrival of the Torm Ingeborg at Marsden Point this weekend is the beginning of the end for Refining NZ.

Carrying 90782 metric tonnes, it will be the last ship to ever deliver crude oil here, with shutdown of the refinery to begin in a couple of weeks.

Minister of Energy Megan Woods said despite global oil uncertainty following Russia's invasion of Ukraine, the government was not reconsidering the refinery's future.

"Of course we've asked the questions about whether there's any new threats to security of supply for New Zealand in the wake of what's been happening globally," she told Checkpoint.

"All the advice that we're getting back is that there is not a threat to New Zealand's supply of oil."

Woods took part in a meeting of 30 Energy Ministers in the International Energy Agency this week, which agreed to release 60 million barrels of oil (currently held in reserve), largely into Europe.

She said that supply wouldn't affect New Zealand's physical supply and security because we don't receive oil from Russia.

"Most of the South East Asian refineries, from which we'll be getting our petrol, don't use Russian crude."

Instead, Minister Woods said the release was about stabilising prices and reassuring markets that there is plenty of supply.

She was seeking advice from oil companies, the Ministry for Business, Innovation and Employment, independent consultants and international counterparts on the issue.

But keeping the refinery open was not on the cards.

"In order for us to refine oil here, crude needs to get through as well - and it's crude that's setting the price at the moment - so either from a physical supply or a price, the argument doesn't really stack up there," she said.

Despite the assurances, not everyone was convinced we were sitting pretty.

Sustainability Council executive director Simon Terry said New Zealand had long supply lines for fuel delivery and yet it kept far lower reserves of fuel than other countries.

New Zealand had typically just 20 days' worth of diesel kept onshore, he said.

"Until we decarbonise trucking a fair bit, it's only diesel that can keep food on supermarket shelves."

Keeping the refinery in operation 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 exporter of oil and while Terry said the invasion of Ukraine was already having an affect on the oil markets, that brought into sharp focus the threat of tankers stopping travel here, and the cost of letting the refinery close.

There was also concern about how the oil we do have access to will be transported around 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 geographic location, we're miles away from some of the refineries that we're taking fuel from.

"As we've seen with our supply issues in our container fleets, once they become constrained the prices go up quite quickly.

Harrison said New Zealand would be reilant on oil companies to charter vessels to get the fuel around - and worried that there hadn't been much testing of how their plans would work.

"We've just seen some light documents put by Z (Energy), but there's nothing to really scrutinise it - so we've got quite a bit of concern actually."

Refining New Zealand is due to wrap up its operations by the end of the month, before taking shape as Channel Infrastructure, which will store refined fuel only.