New Zealand Explores Swapping IEA Tickets to Secure Fuel Supply

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(Bloomberg) — New Zealand is considering using options it holds with the International Energy Agency as an insurance policy against any future squeeze on fuel supplies.

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New Zealand holds options, or tickets, with the IEA for crude or refined product that it doesn’t need, and the proposal may see those swapped for the gasoline, diesel or jet fuel it does need, Prime Minister Christopher Luxon said Monday in Wellington. The strategy may ensure the nation has additional supply the end of June, he said.

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Luxon and his ministers have been working with fuel importers to ensure sufficient supply while also developing a response plan for when stocks get dangerously low. The government wants to avoid drastic measures that would hit the productive sector and stall economic growth. It has been considering options to secure additional fuel supplies beyond existing minimum supply obligations.

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“We want maximum optionality should this situation deteriorate in two month’s time,” said Luxon. “What we’re doing here is making sure that we can source any alternative sources of supply that are incremental to what the fuel importers already have on their orders.”

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The nation had 55 days of diesel, 59 days of gasoline and 50 days of jet fuel either in the country or on the water as at March 25, it said earlier today.

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Finance Minister Nicola Willis, speaking with Luxon, said the government has already been approached by third parties with unsolicited proposals to increase supply, and is now urgently progressing commercial assessment of those proposals.

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“The proposals would involve the government working with parties to get additional supplies from offshore — an insurance policy, if you will,” she said.

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One specific proposal is to swap IEA tickets for product suitable for New Zealand’s needs, she said.

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“What we are now doing is assessing that proposal to see that it’s commercially a good deal for the New Zealand taxpayer, and also providing the opportunity that if there are others who wish to submit a proposal of that sort that they can,” said Willis. “It’s essentially taking something that’s a concept on paper and turning it into real diesel and petrol for New Zealand tanks.”

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Any product secured under the proposal could be stored either offshore or domestically, she said. One possibility is to allow Channel Infrastructure Ltd. to deliver more diesel storage at its Marsden Point site, and officials are developing a proposal for ministers to consider.

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Willis said the nation remains at Level One of the national fuel plan. Ministers did consider whether a formal assessment of the status was required after a slight decline in jet fuel stocks and policy developments in Australia, she said.

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“Officials have advised me that none of these changes present a material challenge to fuel supply and therefore they have not recommended a formal assessment meeting under the national fuel plan,” she said.

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