The government is defending its assessments that there is little risk to the country's energy security, even if the only oil refinery stops operating.
Energy Minister Megan Woods said geopolitical risks were low. Photo: RNZ/Samuel Rillstone
A shareholder vote takes place today on turning the Marsden Point refinery into an import-only hub.
The Ministry of Business, Innovation and Employment (MBIE) said that "would mark a significant change in New Zealand's fuel supply chain".
But its advice was that the supply chain was secure because the country could get fuel from multiple locations overseas.
It was "very unlikely" the country would ever be cut off entirely, and if it were, this would cut shipping of crude oil, too, the ministry told RNZ.
Energy Minister Megan Woods said she was awaiting new advice from the ministry "on the implications of Refining NZ's decision."
But as for geopolitical risks, "officials have assessed these risks and consider them to be very low", she said.
Documents show the company wanted to know the government's options around fuel security.
Woods added: "To date, [the company] has not requested financial support from the government to keep refining operations going."
Toby Dalley, who did a master's research on the country's oil security, said shutting down all refining removed the option of being able to process crude if need be.
He found big gaps in the government's risk assessments since 2005.
"Surprise would be a bit of an understatement," he said.
"I thought that I was missing something."
The assessments assumed that the market would function through any crisis, however major, and other countries would not try to impede the flow of oil, he said.
"The way that they were examining the risk of an external supply disruption, it was quite a significant over-simplification.
"There was very little examination of New Zealand's supply chain itself" or of the way oil actually was transported here, Dalley said.
The most substantive report to MBIE about the refinery stopping, in December 2020, said it did not model "a failure in normal global trading activity".
It added that if this did occur, then the loss of crude oil refining "would reduce New Zealand's options".
It did model the disruption to supply from the main source of imports, North Asia, and said the slack would be picked up "quickly" by the US, Middle East, India and Europe.
But it also said that such disruption "would be more easily managed under the current supply system".
The ministry said that as a signatory to the International Energy Program, New Zealand country must hold stocks equivalent to at least 90 days of net imports, and have emergency response measures including restraining fuel use.
A lot of that reserve stock is not held onshore but in the form of redeemable "tickets" that still depend on the fuel being able to get here.
Reports to the ministry say the data on fuel stocks it relies on has been unreliable.
The ministry said it has been working to improve this and has brought in a new monthly oil supply data series in place of the previous quarterly data.
"Regulations requiring fuel companies to collect and disclose certain information are currently being developed," it said.
It said it did regular risk assessments.