Source: Radio New Zealand
Currently the country has about 52 days worth of fuel supply either in country or en route. RNZ
Shane Jones is continuing to make a case for why the Marsden Point refinery should have been saved, but his coalition partner David Seymour says the economics don’t stack up.
The debate over whether the now-defunct refinery would have left New Zealand less vulnerable to supply chain issues played out extensively in Parliament on Thursday.
It comes after government ministers met on Wednesday night to discuss the country’s fuel security as the ongoing war in Iran puts pressure on supply.
Currently the country has about 52 days worth of fuel supply either in country or en route.
Jones, the associate energy minister, first blamed the previous Labour government for allowing oil companies to give up storing fuel here in favour of a ‘just-in-time’ model relying on multiple import sources, in an interview with RNZ’s Morning Report on Thursday.
Responding to that criticism, Labour leader Chris Hipkins said Jones is being dishonest by blaming the previous government for current fuel resilience woes.
Hipkins told RNZ the closure of Marsden Point was a business decision, made by its private owners, and not a government decision.
“Ultimately Shane Jones is being very dishonest in the way he’s presenting that.
“Marsden Point refinery was processing oil that was imported from offshore. To say by importing the oil already processed, that somehow fuel security in New Zealand is less because of that, is just wrong.”
But Jones has doubled down saying the previous government fatally wounded the country’s fuel security in its decisions around Marsden Point, and says a 2021 Cabinet paper proves it.
The paper, which RNZ has a copy of, shows the Labour government considered providing a loan to Marsden Point but ultimately the then-Minister of Energy Megan Woods said there was not a strong case.
Hipkins says if Marsden Point would be useful as a storage option then “the tanks are still there and [the coalition] can have that conversation”.
It’s unlikely to get wide support at the coalition cabinet table however, with Act leader David Seymour declaring it a bad idea.
Seymour used to work at the refinery and his grandad helped build it in 1962.
“Let’s get a few things straight, first of all the shareholders chose to close it down. It was a commercial decision because it was costing more to refine there than elsewhere.”
To justify subsidising the refinery now to have it open would require a public benefit, he said.
“Once you go through the arguments it doesn’t actually stack up.”
When RNZ put to Seymour that it was his coalition partner, Jones, who was making the arugments to keep it open, he responded: “Well look, economics is not a gift given to everybody”.
Jones, however, has pointed to the 700 million litres of storage capacity at the refinery and the benefits that would bring if it was available today.
On Seymour’s criticism of his economic credibility, Jones said, “the leader of the Act party can say what he likes”.
“Sadly I was unemployed when that decision was made for the closure, and it would never have happened if me and my leader were around.”
Finance Minister Nicola Willis, who is chairing the ministerial group overseeing fuel security, said there was no question if Marsden Point was up and running today it would make the country more resilient.
“That’s a simple fact.
“Now the circumstances under which it closed is for the previous government to answer to, they were in the hotseats at the time,” she said.
Recommissioning it now isn’t an option, according to Willis.
“I’m focussed on what we can do here and now, not looking back in anger, but of course those who observe we’d be more resilient if it was still up and running, they’re right.”
‘Hard to say’ – fuel supply expert
Consultant Andreas Heuser, a fuel supply expert at Heuser Whittington, helped author a fuel security study last year, which found reestablishing the refinery would bring only a little more resilience at a very high cost.
“The study did conclude that re-establishing Marsden Point was by far and away the most costly option, and the resilience benefits that it did offer were relatively small compared to other resilience options, such as increasing tankage, transitioning to EVs, improving the fleet of fuel trucks that drive around the country.”
Heuser told RNZ it was “hard to say” whether it would help much now even had it remained open, given the refinery processed Middle Eastern crude.
“It might be marginally more secure. But also, given that it processed a lot of Middle Eastern crude, there’s definitely a case to say we’d be less resilient.”
Heuser said Jones did have a point that the refinery would have given New Zealand a “larger crude storage buffer”.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
