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
418,000 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.

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