By Chris Leitch*
Marsden Point’s refinery website has this to say; “We are a critical link in New Zealand’s energy infrastructure and a major economic and social contributor to Northland. Refining NZ has a reputation as one of Asia-Pacific’s safest and most reliable refineries.”
It’s also well maintained and its equipment is more sophisticated than that of Australia’s two remaining refineries, able to process very low grade crude and produce high quality fuel, especially jet fuel, and by-products such as bitumen and sulphur.
Yet the final step in a decision to close it, dismantle its refining infrastructure and leave only a tank farm, is due to be made any day. All our fuel will then be refined in Asia and imported. Shareholders, dominated by the oil companies, want more profit.
Over 600 jobs will be lost along with the skills those people have. The refinery accounts for 8% of the Northland economy.
Should we believe assurances from the oil companies that our fuel supply will be secure in a crisis?
Secure for essential operations like helicopter and other emergency services, inter-island ferries, shipping to the Pacific Islands, army, navy and air force rescue and disaster relief operations, the trucking fleet that moves goods and food around the country, our agricultural producers, and our air freight exports by Air New Zealand?
In the event of a natural disaster or conflict shipping routes to New Zealand or supplies to overseas refineries could be cut off and the supply of fuel to essential services severely compromised.
In September 2019, state-owned Saudi Aramco oil processing facilities at Abqaiq and Khurais in eastern Saudi Arabia were targeted in a drone attack. Oil production from the world’s leading oil exporter was cut by half.
You think the Asian refineries will say - oops we're short of oil, but that's ok we'll ensure our smallest customer, New Zealand, gets what it needs before our bigger customers?
Tensions in the oceans where tankers from the Asian refineries will need to travel have been increasing for years. China has been claiming vast areas as their own and has built a military base on islands it has reclaimed from the ocean off the coast of the Philippines – in contravention of international laws.
AUKUS, and new pact between Australia, Britain, and the US announced in the last few days will see Australia with nuclear powered submarines.
Shipping lanes may face closure. Where will New Zealand’s refined fuel come from, and how long will it take to source alternatives? We know what it’s like to be at the bottom of the queue with sourcing vaccines.
The head of the Northern Australia Strategic Policy Centre John Coyne is aghast. "They're very naive," he said.
"They're buying into a very dated view of globalisation, and they certainly haven't learned the lessons from Covid-19, around secure supply chains and national resilience."
The pandemic disproved assumptions that global supply chains could readily deliver, whether it was vaccines or oil, he said.
Australia clearly didn’t have faith in oil industry assurances and took steps to protect itself against the possibility of fuel insecurity, the government agreeing to subsidise its last two remaining refineries to keep them operating.
Our government has a responsibility to ensure NZ's fuel security, not leave it to chance. So it should give the shareholders an offer they can't refuse and assume ownership of the refinery. Additional tax on fuel is not an option to line the pockets of private shareholders.
No taxpayer money would be required to achieve government ownership. The government-owned Reserve Bank has created around $60 billion in the last 18 months. The money needed to purchase the refinery shares would be a drop in the bucket.
At least with the refinery operational we could refine our own Taranaki oil (some of which it already processes) and keep essential services running should a crisis eventuate. It would allow us to blend in bio-fuels and other options as they come on stream.
Government ownership would also provide a unique opportunity to break the stranglehold the oil companies have on fuel retailing. That stranglehold is likely to increase with Australia’s Ampol currently making a bid for the county’s largest retail group, Z Energy.
Run as an SOE it could be a wholesaler, selling fuel at a common price, allowing smaller retailers like Waitomo and Gas to compete and others to enter the market and provide real price competition at the pump.
Without the profit component private shareholders demand it would bring the costs of fuel for transport and Air New Zealand down and reduce their costs – an effect we would all benefit from through lower prices.
Can the refinery be saved?
Who knows, but it’s worth a try. Over 15,000 people think so. That’s how many have signed a petition calling for that already. You can find it at https://www.change.org/Save-the-Refinery
*Chris Leitch is leader of the Social Credit Party.