Airlines struggling with disruption from staff shortages now face a fuel supply glitch. Photo / Brett Phibbs
Airlines struggling with disruption from staff shortages now face a fuel supply glitch. Photo / Brett Phibbs
Z Energy has apologised to its airline customers and any passengers that may be affected after fuel rationing was imposed out of Auckland Airport.
An “off-specification” load of around 25 million litres has forced fuel suppliers to activate the highest level response – rationing to undisclosed levels - as aprecaution, just in case another issue exacerbated the current problem.
While major customers Air NZ and Jetstar say they haven’t had to change schedules yet, the supply glitch is another frustration for airlines rebuilding after a tough three years and coming into an extremely busy holiday period where fuel uptake at Auckland doubles.
The Government today said it was investigating whether the requirement to hold minimum fuel stocks could be brought forward from an implementation date of 2024.
Z’s chief executive Mike Bennetts said he didn’t know what the impact of rationing would be.
“We’re obviously very sorry for any impact on our customers and then in turn through to their customers. I don’t know what that impact actually looks like.”
However, it would be nowhere near the impact of the rupture of the Marsden Point to Auckland pipeline in 2017 which cut supplies for 10 days and severely impacted flights.
Bennetts said there were ample supplies of jet fuel in Wellington, Christchurch and Queenstown.
“Airlines could restrict their uptake in Auckland and take on more in other places. We’re working with them to make it a legitimate option - to take the pressure off Auckland.”
A ruptured fuel pipeline from Marsden Point caused chaos in 2017. Airlines won't be so badly affected this time. Photo / NZME
Z is part of a joint venture of fuel companies – including BP and Mobil - that own and operate the Auckland jet fuel supply chain from what is now just a terminal at what used to be the Marsden Point refinery, a 168km pipeline to storage tanks in Wiri and on to nearby Auckland Airport.
Bennetts said Z was trying to accelerate a shipment of fuel due on December 12 and was investigating whether it was worth diverting another heading to parent company Ampol facilities in Australia.
“We’ve asked it to hit the accelerator to see if it can get here sooner,” said Bennetts.
He said the fuel that came from a refinery in Asia had passed tests before it was loaded and when it was about to be unloaded but halfway through the process further tests revealed it was not up to spec.
Special care was taken with aviation fuel because of safety considerations. “We couldn’t put fuel that was slightly off into the system for obvious reasons.”
He said new fuel was always isolated from hundreds of millions of litres stored elsewhere at Marsden Point and there were between 24 and 26 days’ storage in the country. But the gap to the next shipment meant the fuel industry had to meet with the Board of Airline Representatives and customers, and notify the Government about the issue.
“By yesterday we had a meeting it looks like its sensible to go to some form of rationing to make sure we don’t make a challenging situation more severe,” said Bennetts. “We’re a couple of days’ short – we just need to make sure we ration fuel if something else goes wrong we don’t have a significant disruption.”
A report for the Ministry of Business Innovation and Employment from consultants Hale and Twomey in 2020 warned that without refining capacity at Marsden Point, there was no capability to reprocess an off-spec shipment at Marsden Point.
Bennetts said that capacity wouldn’t have helped in the current case because of the length of time taken to reprocess it.
The fuel companies were major shareholders in what was Refining NZ who voted to cease refining operations in April after low margins hammered profitability. The plunge in demand during Covid-19 lockdowns further hurt the company and the Government baulked at providing any financial support to keep refining going.
Z Energy chief executive Mike Bennetts. Photo / File
Bennetts said the economics of the operation was questionable.
“Refineries are capital intensive, carbon-intensive and aren’t good economic propositions most of the time - it’s even more so with a small refinery in New Zealand that only serves the domestic market.”
The Government said it couldn’t provide financial support to keep the refinery open.
Energy and Resources Minister Megan Woods said a month ago New Zealand’s fuel supply resilience was being improved.
“The Government has agreed to a package of actions to ensure sufficient fuel stocks are held onshore to further improve our fuel supply resilience and economic security,” she said.
Fuel importers and wholesalers with bulk storage facilities will be required to hold minimum levels of onshore stocks of petrol, jet fuel, and diesel. Minimum fuel stockholding levels for them will equate to approximately 28, 24 and 21 days’ worth of petrol, jet fuel and diesel respectively.
She said today the implementation date for the scheme was 2024.
‘‘I’ve had a meeting with officials this morning to see if there’s anything we can do to bring those dates forward.”
