Investments that benefit New Zealand

23/04/2013 - Industry insights, Fuels

Investments that benefit New Zealand

Three years since purchasing New Zealand’s leading downstream fuel business, we have clear views on the state of the sector. Z believes the industry needs significant investment. The industry’s storage and supply infrastructure is only just keeping up with New Zealand’s current fuel demands which have been on the increase for some time.

The tightness of the fuel supply chain was demonstrated in March when the South Island experienced a diesel shortage and some companies ran out of diesel at some of their sites.

Because we understand the impact fuel shortages can have on our business customers, we deliberately hold higher stock levels than forecasted. So while supply of diesel was tight across the South Island, we had already planned for a possible scenario such as this and as a consequence Z’s customers were not impacted. Holding higher stock levels comes at a cost to our business, but we believe it is important to ensure we can consistently meet customer demand.

Recognising that we need a more resilient supply chain, Z has already invested heavily in improving New Zealand fuel infrastructure. On top of the 30 million litres of additional fuel storage we commissioned at Lyttelton in 2011 at a cost of $25m, we’ve just received resource consent to build an additional 25 million litres of storage at Lyttelton Port. We are also currently in the preliminary engineering and consenting phase for additional bulk fuel storage at Mount Maunganui. While we have yet to make a final decision on building the additional tankage, getting the resource consent is another step in the right direction.

Across the industry, we need greater investment. If the industry does not start to change as a whole, one day we will simply not be able to cope, terminals will not be up to standard nor will they be able to hold the extra fuel that the industry is demanding.

As a New Zealand company we’re committed to leading the investments that the New Zealand supply chain needs.

Recent diesel shortage in the South Island

What caused the diesel shortage in the South Island? Factors contributing to the shortage were: An unplanned extension to an outage at Refining New Zealand; late crude oil deliveries; and two companies importing cargos of finished diesel which did not meet New Zealand specifications.

Z Energy General Manager of Supply and Distribution, Rob Freeman, said “As a result of deliberately holding higher stocks, and a strong contracted trucking network, Z was able to meet our customers’ demand. Consequently there were no disruptions to any of our customers during the fuel shortage in March.”


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