Thu, 16 Sep 2004

Action follows reappraisal of oil stocks

Work is underway to lift oil stocks following a reassessment of reserves.

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The Ministry of Economic Development (MED) is leading work with New Zealand's major oil companies to investigate how best to increase the country's stockholding of crude oil and oil products, including petrol and diesel.

The project follows work instigated by Minister of Energy, Pete Hodgson, to ensure that New Zealand holds appropriate reserves. It included a review and recalculation of industry data on oil stocks to meet International Energy Agency (IEA) obligations to maintain 90 days of stocks of oil products as a buffer against disruptions to global oil supplies.

The review and recalculation concluded that stocks are currently about 30 days below the IEA requirement to hold 90 day of reserves and that this has been the case for a long period of time. The physical volume of oil reserves has not changed significantly over this period. The reporting discrepancy has largely been due to longstanding problems with the quality of data provided around on-shore stock levels that came to light during the review, and the way in which stock held off shore, or in transit to, New Zealand was accounted for. Declining domestic production has also been a contributing factor.

Issues around the accurate calculation of actual reserves have now been addressed. Work is now centred on increasing oil stocks to a compliant level.

"We are committed to meeting our IEA obligations and to playing our part in ensuring security of global oil supplies. This review has made our accounting methods for our national stock of petroleum products much more robust and reliable. It is a firm basis from which government, in partnership with the industry, can take timely action to ensure we are actually holding adequate reserves."

Legislation already exists to pass regulations requiring oil companies to maintain 90 days of reserves as required by the IEA. However, MED is currently consulting with industry around what other options exist to ensure that compliant stock levels are reached and maintained in a timely manner.

The Minister noted that the current level of oil stocks does not affect on-going supply to consumers and businesses, as reserve stock levels only become an issue in the event of a major supply disruption.

Download the associated document file here http://www.beehive.govt.nz/Documents/Files/NZ Oil stocks.pdf

ENDS

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