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Tenders to be invited for additional oil reserves

8 June 2006

Tenders to be invited for additional oil reserves

The Government is taking steps to ensure New Zealand meets the requirement of the International Energy Agency to hold 90 days of oil reserves, Energy Minister David Parker said today.

He said the Economic Development Ministry would invite tenders for stock next month.

New Zealand's current stocks are about 60 days of net oil imports. Additional stock requirements to achieve the 90-day target are estimated at 4
18,000 tonnes in calendar 2007, 302,000 tonnes in 2008, nil in 2009 and 32,000 tonnes in 2010. Stock may be in the form of crude oil or refined products such as petrol and diesel.

Mr Parker said the quantities required to meet the target were significantly lower than earlier estimates because of expected increases in domestic oil production from next year.

He said stock might be held in New Zealand or potentially in Australia, the United States, Britain, or The Netherlands, subject to government-to-government arrangements.

Most stock over the next few years will need to be held overseas since New Zealand has little spare storage capacity. Any stock held in Europe or the United States could be swapped with stock held closer to New Zealand to reduce transport costs should the stock be required in New Zealand for a local emergency.

Mr Parker said the government would also meet the costs of acquiring the additional reserves to avoid the need to impose a levy on sales of petrol and diesel. Costs are estimated at around $50m over the next three years.

Subject to a successful tender round and finalisation of government-to-government arrangements, New Zealand expects to achieve the IEA target by the end of this year.

ENDS

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