War shock highlights fuel supply chain risk

The outbreak of war in the Ukraine will have major implications for New Zealand fuel security, say maritime industry representatives.

The outbreak of war in the Ukraine will have major implications for New Zealand fuel security, say maritime industry representatives.

Maritime Union of New Zealand National Secretary Craig Harrison says global energy markets have been thrown into turmoil by the outbreak of war.

He says as well as continuing rises in fuel prices, the role of Russia as a major oil and gas exporter meant global supply chains are being hit by another shock.

In 2021, Russian exports accounted for 5.2% of global seaborne trade on Tankers (oil and refined oil products), and 6.0% of global seaborne trade on Liquified Natural Gas (LNG) Carriers, according to shipping industry sources. 

“The disruption to trade and sanctions on Russia will have repercussions on the availability, cost and reliability of overseas fuel tankers coming to New Zealand.”

Following the announced closure of the Marsden Point oil refinery, individual petrol companies are planning to import fuel directly to New Zealand ports on overseas tankers, removing New Zealand’s two domestic tankers the MT Matuku and MT Kokako.

Mr Harrison says New Zealand holds fuel reserves in the form of “tickets” that in theory guarantee access to overseas fuel stocks.
He says during the inevitable disruption of the global tanker market, these reserves might not be easily accessible.

“The problem is New Zealand is relying on assumptions and assurances from petrol companies that look pretty flimsy when you measure them against the current global situation.”

Oil tanker futures prices in the April-June period rose by around 20 per cent on major global routes as the invasion of Ukraine increased the likelihood of sanctions limiting available tonnage supply and altering oil trade flows, according to maritime media reports.

Mr Harrison says the continued use of dedicated New Zealand crewed and flagged fuel tankers is an essential part of fuel security in an increasingly volatile global situation.

“New Zealand fuel tankers provide guaranteed service, reliability and also can be used to hold fuel stocks locally.”

Mr Harrison says the Save Our Tankers campaign has met with Deputy Prime Minister Grant Robertson and the Minister of Transport and is urging Government to ensure New Zealand coastal tankers are kept in service to protect national fuel security.

The campaign for fuel security Save Our Tankers is comprised of the Maritime Union of New Zealand representing seafarers, the New Zealand Merchant Service Guild representing ship’s masters and officers, and the Aviation and Marine Engineers Association representing marine engineers.

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