New protocols on fuel stockpile data agreed

Wednesday 5th June 2019

Government officials have agreed new protocols with the country’s fuel suppliers to ensure they can get daily data on terminal stocks during emergencies.

Gareth Wilson, principal advisor with the Ministry of Business, Innovation and Employment, says the agreement is yet to be formalised but will take effect through the national emergency fuel plan that is currently in draft form.

The arrangement will allow for daily reporting of aggregate stocks of petrol, diesel and jet fuel at all terminals to the government, he told an inquiry investigating the September 2017 Auckland fuel shortage.

“The question hasn’t been addressed as to whether or not that information will be published or passed on to other parties,” he said.

The inquiry, led by Elena Trout and Roger Blakeley, yesterday heard that firms trying to deal with fuel shortages after the sudden closure of the 170-kilometre pipeline from the Marsden Point oil refinery to the Wiri fuel terminal in South Auckland initially struggled to get good information.

Paul Kelway, treasurer of Air New Zealand, said oil companies had, during previous jet fuel shortages, resisted providing any information on their stockpiles.

But in this case it would be Tuesday, Sept. 19 – five days after a loss of pressure was detected on the pipeline – that officials and fuel users had a real handle on the fuel stocks available.

“When that crisis was at its peak, ministers and officials at a senior level were exasperated by the fact that that could not make the numbers add up to get the stock position,” he said.

“The level of exasperation was severe.”

The pipeline from the Marsden Point refinery delivers about 95 percent of Auckland’s fuel and all its jet fuel.

The 10-day shutdown forced airlines to ration fuel and tanks in Christchurch and Wellington were converted to handle jet fuel. Emergency regulations were put in place to enable jet fuel to be trucked from Marsden Point, and tanks at Wyndham Terminal in Auckland were converted to receive jet fuel.

Port deliveries were diverted and road shipments coordinated across the North Island to ensure sufficient petrol and diesel supplies for Auckland.

Kelway was speaking in support of a call by the Board of Airline Representatives for data on jet fuel stockpiles at the five major hubs – Marsden Point, Wiri, and the Auckland, Christchurch and Wellington airports – to immediately be made available during a supply emergency.

Kelway said the data should be collated daily by industry but only shared with airlines and other relevant bodies when a shortage was declared.

MBIE's Wilson told the panel that the government’s previous data sharing arrangements with the fuel industry went back to about 2005. They were developed for a long-term supply shortage in which it was assumed weekly stock updates would be sufficient.

During the 2017 shutdown “it was very apparent to everyone involved that actually weekly numbers are not very useful,” he said. “What you need is daily reporting.”

In its submission to the inquiry, Mobil said any consensus among relevant stakeholders as to what information should be shared between parties would need to be sensitive to competition and anti-trust legislation.

It did not support providing aggregated volume data to aviation customers at each supply entry point.

“Both New Zealand and international anti-trust regulations highlight the extreme sensitivity surrounding information-sharing of such a nature, and the need for very structured communication protocols in compliance with anti-trust laws,” Mobil said.

Trout was keen to test how real firm’s concerns were that information sharing could cross into the realms of anti-competitive behaviour.

Wilson said firms were very sensitive to how their data would be used and agreed that there could be merit in investigating an authorisation under the Commerce Act for information sharing.

Questions of BP and Mobil went unanswered; BP wasn’t represented and Mobil’s representative said they were there to observe and had no mandate to answer questions from the panel.

The hearing reconvenes in Auckland on Thursday when its focus turns to longer term fuel resilience for the Auckland region.

(BusinessDesk)

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