At a time of global uncertainty, any steps that New Zealand can take to shore itself up are worth their weight in gold.
It’s little surprise, then, that this week’s unveiling of two critical pieces of fuel resilience infrastructure – with Z Energy at the forefront of both – has been celebrated by the company and the Government alike.
Prime Minister Christopher Luxon, Finance Minister Nicola Willis and Associate Energy Minister Shane Jones headed up to Marsden Point on Tuesday for the commissioning of a refurbished 30-million-litre jet fuel tank that will more than double Z’s existing storage at the site, along with a refurbished diesel tank capable of holding more than 90 million litres.
“When you’re part of an organisation that imports a large chunk of New Zealand’s fuel, that comes with a lot of responsibility, and the best way to articulate that responsibility is through action,” Julian Hughes, the leader of Z’s supply team, tells Newsroom.
“To be sitting at a point now where you can actually point to not just things you’ve committed to, or ideas that you could do, but actually tangible outcomes, it does feel rewarding.”
The diesel storage was secured as part of a strategic supply deal between Z and the Government following the Middle East fuel crisis, establishing an emergency reserve of 90 million litres, or around nine days of cover to protect against future supply shocks.
That agreement was signed in late April, leaving Z Energy and fuel import terminal operator Channel Infrastructure precious little time to get things ready in what Hughes says has been “an incredibly intense period”.
“It has been a really collaborative effort: it’s required supply chain expertise, it’s required financial expertise. You might have heard the Government talk about how they drove a hard bargain – it was one of the most intense negotiations we’ve been involved in because of what was at stake, but also the timeframes we’re working to, so it required some of our best negotiators to participate in that process.”
On the other hand, work on the jet fuel storage had started well before the outbreak of war in Iran – a benefit of Z’s desire to look ahead and invest in energy resilience before it’s actually needed.
That didn’t make it any more comfortable to watch the impact of the war, Hughes says, but it was reassuring to know the company had already been thinking about how to handle such an event.
“One of the quotes that has really stuck with me is that the most expensive time to build an insurance policy is during the crisis. It takes a little bit of courage to do that ahead of time, and so I’m pretty proud of the fact that we were able to identify that opportunity, work with Channel Infrastructure, and come up with a solution that was building some additional storage ahead of a crisis.”
The numbers are striking, too: the 30 million litres of jet fuel is the equivalent of 10,000 flights between Auckland and Wellington.
That provides reassurance to New Zealanders that essential goods, services and businesses can continue to operate, helping communities function as normal even during a future disruption.
“The way the system has responded to date has enabled fuel to keep coming, but it hasn’t removed this anxiety around, ‘But if it did stop completely, then what?’
“Early on in the crisis, we commissioned research into how New Zealand’s fuel resilience settings stack up against those of our international counterparts. What we found was that New Zealand was one of the few countries without strategic fuel reserves for times of crisis. Having that capability is a bit like an insurance policy — you hope you never need it, but it provides confidence that the country is better prepared to respond if a significant disruption happens again.”
Nor is Z resting on its laurels: the company is already working with industry on additional jet fuel storage at the Wiri terminal in South Auckland, with a new tank due to be commissioned in 2027.
That research concluded that additional onshore storage is of value to the country, and that Government and industry should both play a part in securing this for New Zealand.
“There needs to be a greater balance between actual fuel accessibility – what’s in country or what’s close to country – versus what’s held by those tickets.”
Z’s modelling has also shown potential benefits from increasing fuel importers’ minimum stockholding obligations for both diesel and jet fuel.
That is work that Hughes and his team will continue to put at the front of their minds, given the consequences of inaction.
“Taking a leadership position does take a bit of courage: we say Z is for Aotearoa New Zealand, so if you’re saying that, what does that actually look like in practice?
“To me, this is a tangible example of that, both in terms of the work we’re doing around jet fuel but also working closely with the Government to build that additional storage capacity, which I believe should provide New Zealanders with some peace of mind.
“We can take some pride in that, we can pause and reflect and say it’s got a job well done, but there’s still work to do.”
Visiting the site to make completion of the work, Prime Minister Christopher Luxon praised the companies involved. Luxon told RNZ “Hearing about how much water blasting and cleaning was needed inside these tanks; the 775 metres of piping that was needed … and the way that was done was just incredible.”
