New Zealand's oil supply a month short of international standard

10.00am

New Zealand's stocks of oil are a month short of international standards but the Government is denying the country could be in trouble if there are terrorist attacks or problems with the world's oil supply,

Energy Minister Pete Hodgson has revealed that New Zealand's supply has been below the International Energy Agency-set standard of a 90-day stock.

Mr Hodgson has known for a month that for the past two years, New Zealand's stock of oil has only been around 60 days, he told National Radio.

Mr Hodgson said despite that, there probably wasn't a risk that the country's oil supply would be disrupted.

"In the first and the second Iraq war, which in recent times are the most likely causes of disruption to oil supply, we have not touched any of our reserves or very little of them."

National's energy spokesman, Roger Sowry, said the law was clear that a 90-day stock had to be maintained.

"The fact the oil companies have not done that and that the Government clearly has had its eyes off the ball and has not been monitoring it is of real concern, particularly in a world with increasing levels of terrorism."

Mr Sowry told NZPA Mr Hodgson now needed to talk to the oil companies and make sure they would meet their obligations.

"I'm quite frankly stunned that the minister hasn't had a regime in place to monitor this. The fact that we've gone a couple of years without that level is negligent and he has to fix it."

Road Transport Forum New Zealand chief executive Tony Friedlander welcomed the Government's move to rectify the oil stock shortage.

"New Zealand is highly dependent on diesel for the distribution of goods throughout the whole economy.

"Essential supplies such as food, medicine and other requirements are delivered almost on a daily basis. If there was ever to be an emergency where diesel wasn't available the whole economy would fail."

Mr Friedlander said the country's issues weren't solely from potential problems in the Middle East but also because of New Zealand's sheer geographical distance from oil supplies.

He said in past years the supply of diesel had been short when contaminated or poor quality diesel had arrived in New Zealand.

"It was only through the co-operation of the various oil companies that we managed to avoid running out in key spots."

Mr Hodgson said a "review and recalculation" had led to the conclusion that stocks were about 30 days below the 90-day requirement.

"We are committed to meeting our IEA (International Energy Agency) obligations and to playing our part in ensuring security of global oil supplies," he said in a statement.

Issues around the accurate calculation of actual reserves had now been addressed and work was now underway to increase oil stocks to the proper level.

The reporting discrepancy had been largely due to problems with the quality of data about on-shore oil stock levels, Mr Hodgson said.

Other factors were the way in which oil held offshore or in transit to New Zealand was accounted for. The country's own declining domestic production had also been a contributing factor.

- NZPA