Government to pay $50m getting oil reserves up to scratch

The Government will pay an estimated $50 million* for additional oil supplies so New Zealand meets the international standard of holding 90 days' reserve.

Energy Minister David Parker said yesterday the cost would be spread over the next three years and there would not be a levy on petrol and diesel.

The International Energy Agency's (IEA) requirement is that countries hold 90 days' reserve but New Zealand's current stocks would last about 60 days.

The IEA this year criticised New Zealand for not having sufficient reserves, and Mr Parker said the Government was taking steps to ensure it did.

He said the amount needed to meet the requirement was significantly lower than earlier estimates because of expected increases in domestic oil production from next year.

Additional stock requirements to achieve the 90-day target were estimated at 418,000 tonnes in calendar year 2007, 302,000 tonnes in 2008, nil in 2009 and 32,000 tonnes in 2010.

Mr Parker said stock might be held in New Zealand or potentially in Australia, the United States, Britain or The Netherlands, subject to government-to-government arrangements.

"Most stock over the next few years will need to be held overseas since New Zealand has little spare storage capacity," he said.

"Any stock held in Europe or the United States could be swapped with stock held closer to New Zealand to reduce transport costs should the stock be required in New Zealand for a local emergency."

He said the Economic Development Ministry would invite tenders for stock next month.

- NZPA

* CORRECTION: In the original version of this story we incorrectly reported the cost as $150 million.