Shane Jones: Associate Energy Minister on the deal with Z Energy to stockpile another 90 million litres of diesel
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What is the significance of the deal with Z Energy for diesel stockpiling?
So the latest rainy day fuel deal as a result of the Hormuz drama involves Zed Energy and 90 million litres of diesel. That's nine days supply. Zed will own and store it. The government will control its release. The Associate Minister for Energy, Shane Jones, back with us. Good morning. Yeah, g'day, morning. Your comment yesterday about sweating bullets to get this deal across the line, how hard has it been?
Well, obviously we've got experts securing us options, not only now but into the future.
How does the government plan to manage the diesel release?
Those are called call options, but it's crowded space. I mean, for example... The Europeans are now scouring everywhere looking for options for aviation fuel. And feedstock problems continue to afflict Southeast Asia, but as you've said in the past, this is a sophisticated industry.
What challenges did the Associate Minister face in securing this deal?
If the price is good enough at the margin, people will bring on additional sources of supply, but It's been a while since the government worked directly with anyone into the market to secure a buffer.
How at risk is public money, depending on when it's released and how it's released and what the price is at the time?
Yeah, I don't think Nicola or I have shied away from the fact that if the Crown intervenes, despite relying upon the sophistication of the fuel companies, if the price does drop, and at some point you have to hope and pray it'll get normal again, God knows when, then there's likely to be a margin in the wrong direction. So we take options. We take the highest quality of advice. In this case, MBIE, there's a chap there working there, Robert Pagu. He's had some professional commercial advisors, and I think Kiwi should be reassured that this is not something that we've done recklessly.
If we're optimistic and things settle down, a deal is done, the straight opens are set, once we get the 90 million litres, if we get it, and we're talking June, July, would we simply feed it into the market? It would replace what we would normally buy anyway. We may or may not take a hit, and then life will carry on as per normal.
Yeah, well, I like the tail end of what you've just said. In the event that we do strike a problem logistically or supply lines clog up, then this is a buffer to ensure we don't mine too far below the statutory threshold that the oil, sorry, the fuel companies have to work within. And you're right, it could come to pass that things will normalise in a way that's a lot quicker than the average armchair critic believes to be the case. But I think that Kiwis, certainly those who are big users of diesel, should have a lot of confidence that we've moved forward.
How does the buffer of diesel impact New Zealand's energy security?
We believe that we've covered off excess risk and we're going to have it on the country, stored up at Marsden Point. and despite the best efforts of Labour to say they would have done differently, they didn't, and they are now looking at me enviously.
The mixed messaging around jet fuel, you all said you're looking at jet fuel, it's complicated, but you're looking at it. Nicol Rabishanka was on the programme the other day in New Zealand, boss. He said there is not a problem of supply. Price is a killer, but supply is fine. So who's right?
Oh, well, look, I'm not going to cut across him in terms of how he's running his business. I'm here to provide, along with Nicola... a level of proactive leadership. If we do need a buffer, we'll take advice from our officials, not only our professional advisors, MBIE and the Ministry of Transport. And there's a great deal to be said because over time, the fuel companies are going to have to store more in-country anyhow. And we were very disappointed. The fuel companies promised back in 2018 and 19 out at Woody near the Auckland airport that they'd bang together another tank. Of course, jack has happened. And if necessary, we'll move in that direction. But we're not going to do it in any adventurous way.
We'll take the best quality of advice. It's a little bit like the virtual fuel options that the government still has. When we looked into it, they are executable, but they're devilishly complicated.
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Chapters
5 chapters
1
What is the significance of the deal with Z Energy for diesel stockpiling?
0:00–0:25
2
How does the government plan to manage the diesel release?
0:25–0:43
3
What challenges did the Associate Minister face in securing this deal?
0:43–2:30
4
How does the buffer of diesel impact New Zealand's energy security?
2:30–4:08
5
What are the risks associated with public money in this diesel deal?
4:08–4:20
Speakers
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