00:00:05
Speaker 1: You're listening to the Weekend Collective podcast from News talks 'b.
00:00:10
Speaker 2: So yeah, prices are up at the pump. Auto shops are selling out of Jerry cans, and we've seen reports of the very large thousand liter tanks being filled up at BP. Look, let's raise the questions around whether we could have avoided this with the Marsden Point. A little bit academic, but the question around New Zealand's fuel security is one that's on many minds. And of course New Zealand would still be reliant on fuel inputs, on inputs to meet fuel needs, but would that have been changed with the if we still had Marsden Point rocking and rolling? Anyway, those questions and more with the Associate Minister for Energy, Shane Jones joins me.
00:00:44
Speaker 3: Now, good afternoon, Hey, gooday folks, greetings, good a, Hey.
00:00:48
Speaker 2: What do you make of the media coverage so far? Have we all been a bit panicked?
00:00:53
Speaker 3: Well, I'm very disappointed about the remarks that have been ascribed to gull. Not once have a single fuel importer conveyed to the government that we are facing shortage emergency situations. They have all told the officials, myself and a variety of others. Mate, that the fuel importers are living within the statutory limits that we created after the Fuel Security Plan was put in place as a consequence of the New Zealand First Coalition Agreement. So the first thing I'm doing tomorrow is finding out from my officials why is the media reporting that Goal feeding a sense of frenzy? And someone needs to talk to Goal because they've either not told me the truth or they're building the lily with the public. We can't have them both. It's got to be one message. You can't be talking about both sides of your God.
00:01:55
Speaker 2: Is it a chicken in the egg thing that you know the media whipped it up and then everyone rushed to the fuel tanks and all of a sudden Goal like a couple of our sites around out it. Could it be a sort of a halfway house in terms of the drama of the whole situation.
00:02:10
Speaker 3: Well, mate, let's just get to the facts tomorrow after fuel officials or indeed the Communist Commission call up someone with some authority called gull up and say, okay, what exactly are the facts? Do you have people that are under capitalized, do you have a logistics problem? Or have you not told the truth to the government in terms of their statutory obligations. No, I'm very cross with them.
00:02:34
Speaker 2: So where are we actually at right now? How serious is the situation then?
00:02:39
Speaker 3: Well, you can look at it one of two ways. Is it a short term blip where we have to pay a risk premium or does it reflect a structural change? And I think for us as Key, we yes, we've got the fifty day fuel access arrangement. Half of it's on the water, the other half is sitting in tanks. Could we have done more? Yeah, there's three hundred liters approximately of storage capacity that is used at marsten Point, and there's another three hundred liters that when the Labor government and the Labor Party in megan Woods close down the refinery. Basically we've lost three hundred liters worth of storage capacity. I mean it's a tragedy that they did that.
00:03:26
Speaker 2: I guess you mean three hundred million leaders, is that right?
00:03:29
Speaker 3: Sorry? Three hundred million letters? Yeah?
00:03:32
Speaker 2: How much fuel should we ideally have in reserve? I mean, it's all very well to talk about it after the fact, but what do you think the ideal is?
00:03:40
Speaker 3: Well, we took some professional advice and I want your listeners to know that in twenty twenty four we published a fairly hefty document which is basically a fuel resilience plan, and we looked at various options and the advice that we took on board were the amounts that we have at the moment. Now. Look, there were people within the community who did approach me and say, well, Shane, we need a least days of diesel. Diesels always going to be a major threat, and we didn't go over. We didn't go over thirty days. I think it's for a little country like yours and mine. If we keep closing down too many institutions, we're going to weaken our resilience. Okay, Labour closed down the refinery. There are threats about our cement factory up and far at A balance has been in the newspaper. Not sure if they're going to stay or they going to go. New Zealand cannot afford. If it wants to give an emphasis to resilience and security to the industrialize, can you give.
00:04:44
Speaker 2: Us a description of how that system works. You mentioned that in terms of our reserves, half of them are on the water and half of them are in tanks. I got the sort of just that our reserves. It's a bit like holding an IOU, but we don't actually have it in our hot little hands all the time.
00:05:00
Speaker 3: Okay, just give me a minute and a half.
00:05:05
Speaker 2: There's something we don't understand.
00:05:07
Speaker 1: You know.
00:05:08
Speaker 2: We've got to credit manage almost Yeah, yeah, mate.
00:05:11
Speaker 3: I have had to learn about it in order to do my job professionally. But in nineteen seventy four there was an oil crisis. The OECD houses an organization called the International Energy Agency. They run a collective system where nations commit to buying tickets or underwriting an entitlement to draw on strategic reserves of oil of fuel. They're only called upon when there's a collective decision made by this international organization to either release it or you have the ability to cash in your chip and buy from that strategic reserve. Now, we've very rarely used them, although, as you no doubt saw reported even on your radio, Staate New Zealand agreed to provide access to the market of one point five one point six million liters. And that's a small fraction of what we have got as an entitlement. If things turn really dangerously awkward, and then we always have about twenty nine thirty days worth of fuel bobbing around coming from South Korea occasionally Malaysia and Singapore. And then we have the fuel that's stored in New Zealand about forty percent at Marston Point, not exclusively, and there are a host of other areas around New Zealand where the fuel importers store either diesel petrol, but aviation fuel is largely stored at Marston Point and it's trainsport via a great big pipe down to Auckland.
00:07:03
Speaker 2: So what's the story with South Korea. There's been talk about whether they might create a difficulty for US.
00:07:08
Speaker 3: Well, countries are looking at their own interests they're hoarding now. To date, South Korea has not said it's going to completely restrict exports. What it said it's going to reduce the capacity to export back to what they were doing I think this month last year. And we have a very close working relationship obviously with a lot of the Southeast Asian countries, and we have not been told by anyone that as South Korea looks to curb the ability to export, they're going to compromise our access. So our foreign affairs officials, no doubt are working had a pretty torrid pace with the governments that we rely upon to ensure that the amity we enjoy with them isn't compromised. But hey, the bottom line is, Southeast Asia imports a heck of a lot of its fuel and various other inputs from the Middle East, and the Middle East conflict is compromising their ability to gain regular, arguably affordable access to the inputs that we're all taken for granted.
00:08:17
Speaker 2: So, just to mention the dreaded words mout at Marsden Point again was the point about Marsden Point is that it wouldn't have been so much about us refining our fuel. It's just we would have more on land right now if that was going.
00:08:30
Speaker 3: Yeah, the life of Marsden Point. On rare occasions, it did process New Zealand sourced oil, but the characteristics of our oil off the coast of Tananaki are such that it's processed overseas. Over the life of the refinery, it drew feedstock from multiple sources. But the moment that the refinery was closed down, I mean it was only done up in twenty fifteen at huge costs. I went there with John Key. He gave the speech, I gave a speech as well. And then twenty nineteen twenty twenty, there was a change in ownership and some of the shareholders and then immediately associated with that change of ownership, drive emerged rather than close it down in the twenty thirties to bring the closure forward. That option was put before Winston and I in twenty twenty, and we told the Tasmanian lady who had been brought to close it down under no circumstances whatsoever would we tolerate that we got booted out of politics and the Labor Party approved of the closure.
00:09:42
Speaker 2: So what steps is the government able to take right now to strengthen the fuel security? You've mentioned the act that officials will be pretty busy. What would it take for you and I guess me therefore to feel reassured about supply?
00:09:57
Speaker 3: Well, we do treat very seriously the fuel security plan we have in place. We have enough fuel will as per the envelope that we created. The fuel import companies assure us. The Channel fuel importation facility at Marston Point have assured us that vessels are on the sea. They're coming to New Zealand with a mix of fuel. But in the future, if we want to boost our resilience. We have got to increase our capacity for storing more in New Zealand now. From time to time, the Americans, for example, have looked at Marsden Point and thought, wow, it's quite an important facility depending on what their plans are for the broader Pacific. But they've never taken it up. They've never taken it up z Bless the cotton socks. They have entered into an arrangement with Channel, which is the old refined and they pay a fee each year, and they've recently refurbished a massive tank. There are a huge number of redundant tanks up there at Marsden Point which still could be recapitalized. And I think this is something as we come through this episode of uncertainty that a future government's going to have to look at.
00:11:27
Speaker 2: Do you know what sort of expenditure we're going to have to make to implement what you're talking about.
00:11:33
Speaker 3: Well, we did get a report developed, and that report had a stupendous figure between five and seven billion to rebuild a refinery. I don't want to pluck a figure as to what it's going to take to recapitalize the existing tanks and it's really up to Goal and the Marsden Point Fuel Company to establish what they pay per.
00:12:03
Speaker 2: Year, what to take for you to suddenly go okay, we've got a real problem here. I mean we've got a problem obviously, but to worry about running out of fuel?
00:12:13
Speaker 3: Mate, you're talking to Shane Jones. I've never ever hid from you, and you've been kind enough to have me on your show from time to time. We are witnessing the industrialization. I say this every month. We intervened and worked with the Japanese to encourage them to not close down the pop facility and took it or because that would drive to the wall about fifteen sawmills. They are now working with my officials out of Cardor buried in MBI, which is a government department, as to how and what do we do with the Japanese. Unfortunately, you've put some money aside. We've witnessed a variety of other places closed down because of the stupendously high costs of electricity, and that's because of the gouging from the gentailor. I'll have more to say about that when we get close to the election, and I think Key weis are going to ask themselves. Okay, you wanted globalization in the past, you wanted just in time, and the Labor Party believed that by closing down Marsden Point they could enjoy some of this. This foolishness that that puerile Greta Thumberg somehow seems to have influenced the Labor Party. So you're not going to get any sense out of them unless we boost our security and our resilience as a small, open trading nation, We're going to continually face these challenges at a time mate that every other nation that I can think of, and our neck of the woods is placing a greater accent on security.
00:13:50
Speaker 2: I guess what I mean is when will you start sweating on this particular issue.
00:13:55
Speaker 3: Well, the Minister of Finance was on the telly this morning on TV one and she basically can I agree with what she said because we're taking the same advice that there are different gray days, there are several gradations, and at this stage, not only are we confident about the amount of fuel that we've got, but it's not only fuel, its inputs such as agricultural fertilizer. And my fear in some parts of the world is that what looks like a fuel crisis could easily turn into a food production crisis, especially for those large countries up in Southeast Asia, and they're going into a period of time where they start to grow food now and it's difficult for them to grow productively food if they cannot get the inputs such as such as fertilizers. Now we're told that our fertilizer stocks are all CARPI until April May. So I think it's really important that when we have these discussions, it's not just about oil. It's about the inputs into the industries that we rely upon as we import their products into our country to keep our industries alive and nothing else. We're a food producing nasion.
00:15:11
Speaker 2: Just lastly, what possibly not quite your portfolio, but related, what do you make of Donald Trump urging other nations to send ships to protect the Strait and does music? I mean, obviously we have a stake in that sort of move, I guess not directly. And what's your take on that?
00:15:30
Speaker 3: Oh, no, I've learned. I've learned in this role. I'll leave those questions either to the Prime Minister or by Orangeturra Winston Peters. We do want to see a cessation of the hostilities. We want to see it wound back, even if it was bound back in the very short term, and I hope and pray that is the case. The level of disruptiveness now is structural. It is going to take quite a long time. Once you start to close down gas oil wells and gas extraction facilities, you can't really shutter them and then the next day or three start them up again. And obviously there's a need for a recapitalization of damaged infrastructure up there. And although people might say, oh, okay, it's only twenty percent of the oil's production and we can get it from elsewhere, the fact of the matter is that for Southeast Asia it's eighty or ninety percent of their inputs. And hello, hello, we've got an enormous amount of reliance upon those markets remaining buoyant to take all the tucker, the goods and services we sell up there. And for example, where do we get our coal from wet from Indonesia. Where do we draw a lot of our industrial produce for our products from it? We get them out of Southeast Asia, Which is why when you lose something like the one Grace cement factory and then you're relying on countries that are starting to hoard things because they're worried about their own resilience. They soon get to a point where they have to look after themselves rather than five million people down at the end of the railway track. That's why we've got to start focusing on our own resilience.
00:17:10
Speaker 2: Hey, Shane, thanks very much for your time this afternoon, and really appreciate it.
00:17:14
Speaker 1: For more from the Weekend Collective, listen live to News Talks edb weekends from three pm, or follow the podcast on iHeartRadio.
Speaker 1: You're listening to the Weekend Collective podcast from News talks 'b.
00:00:10
Speaker 2: So yeah, prices are up at the pump. Auto shops are selling out of Jerry cans, and we've seen reports of the very large thousand liter tanks being filled up at BP. Look, let's raise the questions around whether we could have avoided this with the Marsden Point. A little bit academic, but the question around New Zealand's fuel security is one that's on many minds. And of course New Zealand would still be reliant on fuel inputs, on inputs to meet fuel needs, but would that have been changed with the if we still had Marsden Point rocking and rolling? Anyway, those questions and more with the Associate Minister for Energy, Shane Jones joins me.
00:00:44
Speaker 3: Now, good afternoon, Hey, gooday folks, greetings, good a, Hey.
00:00:48
Speaker 2: What do you make of the media coverage so far? Have we all been a bit panicked?
00:00:53
Speaker 3: Well, I'm very disappointed about the remarks that have been ascribed to gull. Not once have a single fuel importer conveyed to the government that we are facing shortage emergency situations. They have all told the officials, myself and a variety of others. Mate, that the fuel importers are living within the statutory limits that we created after the Fuel Security Plan was put in place as a consequence of the New Zealand First Coalition Agreement. So the first thing I'm doing tomorrow is finding out from my officials why is the media reporting that Goal feeding a sense of frenzy? And someone needs to talk to Goal because they've either not told me the truth or they're building the lily with the public. We can't have them both. It's got to be one message. You can't be talking about both sides of your God.
00:01:55
Speaker 2: Is it a chicken in the egg thing that you know the media whipped it up and then everyone rushed to the fuel tanks and all of a sudden Goal like a couple of our sites around out it. Could it be a sort of a halfway house in terms of the drama of the whole situation.
00:02:10
Speaker 3: Well, mate, let's just get to the facts tomorrow after fuel officials or indeed the Communist Commission call up someone with some authority called gull up and say, okay, what exactly are the facts? Do you have people that are under capitalized, do you have a logistics problem? Or have you not told the truth to the government in terms of their statutory obligations. No, I'm very cross with them.
00:02:34
Speaker 2: So where are we actually at right now? How serious is the situation then?
00:02:39
Speaker 3: Well, you can look at it one of two ways. Is it a short term blip where we have to pay a risk premium or does it reflect a structural change? And I think for us as Key, we yes, we've got the fifty day fuel access arrangement. Half of it's on the water, the other half is sitting in tanks. Could we have done more? Yeah, there's three hundred liters approximately of storage capacity that is used at marsten Point, and there's another three hundred liters that when the Labor government and the Labor Party in megan Woods close down the refinery. Basically we've lost three hundred liters worth of storage capacity. I mean it's a tragedy that they did that.
00:03:26
Speaker 2: I guess you mean three hundred million leaders, is that right?
00:03:29
Speaker 3: Sorry? Three hundred million letters? Yeah?
00:03:32
Speaker 2: How much fuel should we ideally have in reserve? I mean, it's all very well to talk about it after the fact, but what do you think the ideal is?
00:03:40
Speaker 3: Well, we took some professional advice and I want your listeners to know that in twenty twenty four we published a fairly hefty document which is basically a fuel resilience plan, and we looked at various options and the advice that we took on board were the amounts that we have at the moment. Now. Look, there were people within the community who did approach me and say, well, Shane, we need a least days of diesel. Diesels always going to be a major threat, and we didn't go over. We didn't go over thirty days. I think it's for a little country like yours and mine. If we keep closing down too many institutions, we're going to weaken our resilience. Okay, Labour closed down the refinery. There are threats about our cement factory up and far at A balance has been in the newspaper. Not sure if they're going to stay or they going to go. New Zealand cannot afford. If it wants to give an emphasis to resilience and security to the industrialize, can you give.
00:04:44
Speaker 2: Us a description of how that system works. You mentioned that in terms of our reserves, half of them are on the water and half of them are in tanks. I got the sort of just that our reserves. It's a bit like holding an IOU, but we don't actually have it in our hot little hands all the time.
00:05:00
Speaker 3: Okay, just give me a minute and a half.
00:05:05
Speaker 2: There's something we don't understand.
00:05:07
Speaker 1: You know.
00:05:08
Speaker 2: We've got to credit manage almost Yeah, yeah, mate.
00:05:11
Speaker 3: I have had to learn about it in order to do my job professionally. But in nineteen seventy four there was an oil crisis. The OECD houses an organization called the International Energy Agency. They run a collective system where nations commit to buying tickets or underwriting an entitlement to draw on strategic reserves of oil of fuel. They're only called upon when there's a collective decision made by this international organization to either release it or you have the ability to cash in your chip and buy from that strategic reserve. Now, we've very rarely used them, although, as you no doubt saw reported even on your radio, Staate New Zealand agreed to provide access to the market of one point five one point six million liters. And that's a small fraction of what we have got as an entitlement. If things turn really dangerously awkward, and then we always have about twenty nine thirty days worth of fuel bobbing around coming from South Korea occasionally Malaysia and Singapore. And then we have the fuel that's stored in New Zealand about forty percent at Marston Point, not exclusively, and there are a host of other areas around New Zealand where the fuel importers store either diesel petrol, but aviation fuel is largely stored at Marston Point and it's trainsport via a great big pipe down to Auckland.
00:07:03
Speaker 2: So what's the story with South Korea. There's been talk about whether they might create a difficulty for US.
00:07:08
Speaker 3: Well, countries are looking at their own interests they're hoarding now. To date, South Korea has not said it's going to completely restrict exports. What it said it's going to reduce the capacity to export back to what they were doing I think this month last year. And we have a very close working relationship obviously with a lot of the Southeast Asian countries, and we have not been told by anyone that as South Korea looks to curb the ability to export, they're going to compromise our access. So our foreign affairs officials, no doubt are working had a pretty torrid pace with the governments that we rely upon to ensure that the amity we enjoy with them isn't compromised. But hey, the bottom line is, Southeast Asia imports a heck of a lot of its fuel and various other inputs from the Middle East, and the Middle East conflict is compromising their ability to gain regular, arguably affordable access to the inputs that we're all taken for granted.
00:08:17
Speaker 2: So, just to mention the dreaded words mout at Marsden Point again was the point about Marsden Point is that it wouldn't have been so much about us refining our fuel. It's just we would have more on land right now if that was going.
00:08:30
Speaker 3: Yeah, the life of Marsden Point. On rare occasions, it did process New Zealand sourced oil, but the characteristics of our oil off the coast of Tananaki are such that it's processed overseas. Over the life of the refinery, it drew feedstock from multiple sources. But the moment that the refinery was closed down, I mean it was only done up in twenty fifteen at huge costs. I went there with John Key. He gave the speech, I gave a speech as well. And then twenty nineteen twenty twenty, there was a change in ownership and some of the shareholders and then immediately associated with that change of ownership, drive emerged rather than close it down in the twenty thirties to bring the closure forward. That option was put before Winston and I in twenty twenty, and we told the Tasmanian lady who had been brought to close it down under no circumstances whatsoever would we tolerate that we got booted out of politics and the Labor Party approved of the closure.
00:09:42
Speaker 2: So what steps is the government able to take right now to strengthen the fuel security? You've mentioned the act that officials will be pretty busy. What would it take for you and I guess me therefore to feel reassured about supply?
00:09:57
Speaker 3: Well, we do treat very seriously the fuel security plan we have in place. We have enough fuel will as per the envelope that we created. The fuel import companies assure us. The Channel fuel importation facility at Marston Point have assured us that vessels are on the sea. They're coming to New Zealand with a mix of fuel. But in the future, if we want to boost our resilience. We have got to increase our capacity for storing more in New Zealand now. From time to time, the Americans, for example, have looked at Marsden Point and thought, wow, it's quite an important facility depending on what their plans are for the broader Pacific. But they've never taken it up. They've never taken it up z Bless the cotton socks. They have entered into an arrangement with Channel, which is the old refined and they pay a fee each year, and they've recently refurbished a massive tank. There are a huge number of redundant tanks up there at Marsden Point which still could be recapitalized. And I think this is something as we come through this episode of uncertainty that a future government's going to have to look at.
00:11:27
Speaker 2: Do you know what sort of expenditure we're going to have to make to implement what you're talking about.
00:11:33
Speaker 3: Well, we did get a report developed, and that report had a stupendous figure between five and seven billion to rebuild a refinery. I don't want to pluck a figure as to what it's going to take to recapitalize the existing tanks and it's really up to Goal and the Marsden Point Fuel Company to establish what they pay per.
00:12:03
Speaker 2: Year, what to take for you to suddenly go okay, we've got a real problem here. I mean we've got a problem obviously, but to worry about running out of fuel?
00:12:13
Speaker 3: Mate, you're talking to Shane Jones. I've never ever hid from you, and you've been kind enough to have me on your show from time to time. We are witnessing the industrialization. I say this every month. We intervened and worked with the Japanese to encourage them to not close down the pop facility and took it or because that would drive to the wall about fifteen sawmills. They are now working with my officials out of Cardor buried in MBI, which is a government department, as to how and what do we do with the Japanese. Unfortunately, you've put some money aside. We've witnessed a variety of other places closed down because of the stupendously high costs of electricity, and that's because of the gouging from the gentailor. I'll have more to say about that when we get close to the election, and I think Key weis are going to ask themselves. Okay, you wanted globalization in the past, you wanted just in time, and the Labor Party believed that by closing down Marsden Point they could enjoy some of this. This foolishness that that puerile Greta Thumberg somehow seems to have influenced the Labor Party. So you're not going to get any sense out of them unless we boost our security and our resilience as a small, open trading nation, We're going to continually face these challenges at a time mate that every other nation that I can think of, and our neck of the woods is placing a greater accent on security.
00:13:50
Speaker 2: I guess what I mean is when will you start sweating on this particular issue.
00:13:55
Speaker 3: Well, the Minister of Finance was on the telly this morning on TV one and she basically can I agree with what she said because we're taking the same advice that there are different gray days, there are several gradations, and at this stage, not only are we confident about the amount of fuel that we've got, but it's not only fuel, its inputs such as agricultural fertilizer. And my fear in some parts of the world is that what looks like a fuel crisis could easily turn into a food production crisis, especially for those large countries up in Southeast Asia, and they're going into a period of time where they start to grow food now and it's difficult for them to grow productively food if they cannot get the inputs such as such as fertilizers. Now we're told that our fertilizer stocks are all CARPI until April May. So I think it's really important that when we have these discussions, it's not just about oil. It's about the inputs into the industries that we rely upon as we import their products into our country to keep our industries alive and nothing else. We're a food producing nasion.
00:15:11
Speaker 2: Just lastly, what possibly not quite your portfolio, but related, what do you make of Donald Trump urging other nations to send ships to protect the Strait and does music? I mean, obviously we have a stake in that sort of move, I guess not directly. And what's your take on that?
00:15:30
Speaker 3: Oh, no, I've learned. I've learned in this role. I'll leave those questions either to the Prime Minister or by Orangeturra Winston Peters. We do want to see a cessation of the hostilities. We want to see it wound back, even if it was bound back in the very short term, and I hope and pray that is the case. The level of disruptiveness now is structural. It is going to take quite a long time. Once you start to close down gas oil wells and gas extraction facilities, you can't really shutter them and then the next day or three start them up again. And obviously there's a need for a recapitalization of damaged infrastructure up there. And although people might say, oh, okay, it's only twenty percent of the oil's production and we can get it from elsewhere, the fact of the matter is that for Southeast Asia it's eighty or ninety percent of their inputs. And hello, hello, we've got an enormous amount of reliance upon those markets remaining buoyant to take all the tucker, the goods and services we sell up there. And for example, where do we get our coal from wet from Indonesia. Where do we draw a lot of our industrial produce for our products from it? We get them out of Southeast Asia, Which is why when you lose something like the one Grace cement factory and then you're relying on countries that are starting to hoard things because they're worried about their own resilience. They soon get to a point where they have to look after themselves rather than five million people down at the end of the railway track. That's why we've got to start focusing on our own resilience.
00:17:10
Speaker 2: Hey, Shane, thanks very much for your time this afternoon, and really appreciate it.
00:17:14
Speaker 1: For more from the Weekend Collective, listen live to News Talks edb weekends from three pm, or follow the podcast on iHeartRadio.
