Petrol price rise likely to pay for oil reserves

Motorists could get socked with another petrol price rise to bring the country's oil reserves up to international obligations, an oil company has warned.

The Government revealed last year that New Zealand had the equivalent of only 70 days of stocks, below the minimum required by the International Energy Agency (IEA) of 90 days of net imports.

Work has been under way during the past few months on how to address the issue and a report commissioned by the Government recommends oil companies pay for the massive capital investment needed to build new storage facilities.

Shell spokesman Simon King said if the proposal was adopted, it was likely petrol prices would rise by 1c a litre.

Last week the Government passed legislation to introduce a new 5.6c a litre (including GST) petrol tax from April 1 to pay for roading projects.

"It's a very competitive environment at the moment at the moment, certainly for Shell, and certainly any increased burden on the industry ... in terms of additional storage requirements that would have to be built, that cost is going to be passed on to the motorist eventually," Mr King told National Radio.

He believed the Government should lobby the IEA for dispensation from the 90-day requirement.

"Some other countries do have some flexibility within the rules," he said.

"In the past we have demonstrated that we can effectively manage internal oil disruptions and generally we've proven that we manage those pretty well, so our view is that the Government doesn't need to be too draconian on this, that we can go slowly, that we're happy to work with the Government and we suggest they form a working party with the industry."

BP New Zealand managing director Peter Griffiths said the proposal threatened its commercial operating environment in New Zealand and, therefore, put its operations here under threat.

"What is proposed by the Government essentially would require BP to go and ask its international shareholders for several hundred million dollars worth of capital that we can't we make an investment case for," Mr Griffiths told National Radio.

"This would diminish, in the eyes of our shareholders, the value of New Zealand as a market."

Energy Minister Trevor Mallard said Cabinet would decide the direction it would take within about a month but confirmed the 1c a litre rise to pay for increased capacity was "in the ballpark".

The Government should not have to meet the cost because it was "part of a particular industry".

"No one would expect the Government to provide for other industries their storage facilities," Mr Mallard told National Radio.

The country needed storage facilities, but Mr Mallard questioned who got most use from them.

"It is the motorist and the oil companies to run their businesses properly into the future."

- NZPA