An Australian analyst alerts New Zealand is being ignorant about the dangers of shutting down its only oil refinery.
Marsden Point’s prepared closure is being warned versus by some specialists.
Image: 123 rf.com
Investors in Refining NZ vote this Friday on a suggestion from company directors to turn Marsden Point into a terminal that only imports processed fuels, ending six years of the country having its own capability to make petrol and diesel.
The federal government has received starkly various advice, but the latest and most substantial guidance minimizes the dangers.
The head of the Northern Australia Strategic Policy Centre Dr John Coyne is aghast.
” They’re very naive,” he stated.
” They’re purchasing into an extremely dated view of globalisation, and they certainly have not learned the lessons from Covid-19, around secure supply chains and national resilience.”
The pandemic disproved assumptions that international supply chains could readily provide, whether it was vaccines or oil, he said.
” If you listen to the oil companies, they’ll inform you that all the risk is under control.”
However they might not manage the intricacies, when disputes might escalate really rapidly, trade splits were deepening, and one natural disaster might overdo top of another, he stated.
” If the oil refinery in New Zealand closes, you are totally dependent on oil companies doing the best things … an actually harmful proposition.”
‘ What would it take?’
Documents show Refining NZ asked the federal government early last year what alternatives it was looking when it came to the “tactical importance” of keeping the refinery open.
Officials in turn, asked the company “what would it require to make continuing to fine-tune in NZ work?”
The answer is blanked out.
Nevertheless, the company did not go down the course.
In Australia, the government looked at the geopolitical threats and opted to pay up, through a fuel service payment it presented last month.
This could move approximately $2 billion – if oil margins are low – in the next years from taxpayers to its last 2 making it through refineries (below 10 a decade ago).
Coyne says this gamble may not work, but New Zealand must be copying it anyhow.
” It’s a starting point.
” Propping up markets never ever works … however having some oil refining ability … until we can figure a new method is better than having a tactical vulnerability in New Zealand.”
He believed the federal government would be concerned if New Zealand did not save its refinery.
Staggered and baffled
New Zealand scientist Toby Dalley said he was baffled at the blinkered way this nation has actually for years been weighing the risks of running out of fuel.
Dalley checked out 15 years of risk assessments done for the government, for his masters degree research last year into New Zealand’s oil security.
He stated it was “shocking” how these reports depended on assumptions the marketplace might weather any crisis.
” When I started my research, I was rather baffled to discover … those assumptions, which we have not in fact concluded a thorough assessment or modelling of our supply chain and its security.”
Other Western nations like Australia, had actually weighed the effects of actual physical scarcities of oil, Dalley said.
But lawmakers here faced a “space” so that it was not even possible to assess how much Marsden Point’s closure would narrow the options.
” We definitely have not gotten all the details at hand we require to in fact make a notified decision.”
Simon Terry of the Sustainability Council says it’s not far too late for the federal government to follow Australia, and enforce a levy of a cent a litre on fuel to keep the refinery going.
” It resembles insurance coverage,” Terry stated.
” It’s hundreds of countless dollars a day in economic expenses if supply lines are cut for an extended duration. And that’s before what it costs society if food and medical materials run short.
” So you state OK, in order to defend against that possibility, let’s take out some insurance and keep the refinery going so we can a minimum of get 20 percent of the country’s fuel requires met.”
The problem was, rosy danger evaluations had not factored in the genuine costs of interruption – or what it was worth paying to prevent that, he said.
Reports to the federal government note that whether Marsden Point is managing processed fuel or crude, it still depends on imports by tanker.
But Adelaide energy expert Dr Graeme Bethune stated crude can be secured from a wider series of sources.
Even with 2 refineries secured, Australia is considered an outlier for not having much better oil security, he said.
” The Australian federal government has been sort of playing capture up as the outlook has actually ended up being more and more alarming, with refineries closing,” Bethune stated.
Coyne stated “all of a sudden, nationwide durability is really important”.
Though Australia was taking a various tack to New Zealand, and securing its last refineries, even so the US military based around Darwin had actually demonstrated “a vote of no-confidence” in Canberra by building up its own strategic fuel reserves, he said.