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Oil reserves secure for 2008

9 December, 2007

Oil reserves secure for 2008

New Zealand has secured contracts for additional oil reserves in Australia, Japan and the Netherlands for 2008, the Ministry of Economic Development announced today.

Secured through a global tender, the contracts ensure that New Zealand is able to meet its obligations as a member of the International Energy Agency (IEA). One of the main obligations of membership is to hold minimum oil stocks equivalent to 90 days of the previous year’s net imports.

The additional oil reserves are held under “ticket” contracts, which provide the Government with the option to purchase petroleum in the event of an IEA-declared emergency, so as to minimise the effects of such a disruption on New Zealand.

The tickets for 285,000 tonnes of crude oil, petrol and diesel for 2008 were secured for US$5 million.

This is the first year New Zealand has completed a contract for stocks in Japan. This follows the signing of a bilateral treaty with Japan in November, enabling stocks held there to be counted towards New Zealand’s IEA obligations.

New Zealand also has bilateral agreements with Australia, the United Kingdom, and the Netherlands.

Background
The IEA is an autonomous intergovernmental body within the OECD in Paris. It is committed to advancing security of energy supply, economic growth, and environmental sustainability through energy policy co-operation. Most members of the OECD are also members of the IEA. New Zealand joined the IEA in 1975.

In March 2005, Cabinet agreed that the Government should tender for oil stocks to meet the IEA’s 90 days reserve obligation. The Government’s bilateral arrangements with the governments of Australia, Japan, the UK and the Netherlands require New Zealand to seek approvals for proposed quantities of tickets, and for host governments to undertake to not impede the release of stocks to New Zealand in the event of an emergency.

Increased domestic production following the start up of the Pohokura condensate and Tui oil fields means that the amount of reserves the Government needs to secure off shore has reduced. Depending on the timing of new crude oil production streams in New Zealand, a tender may be required for stocks in 2009, although by 2010 the increases in domestic oil production from Tui, Maari and Pohokura may mean no additional reserves are required.

New Zealand’s total 90 days obligation for 2007 was 1.4 million tonnes and in 2008 it is 1.2 million tonnes. The majority of these reserves are commercial stocks held by companies in the petroleum sector.

ENDS

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