New Zealand’s Fuel Security Explained

Empty Tanks and Open Seas — The Complete Story of New Zealand’s Fuel and Gas Storage, Supply, and the Fragile Chain That Keeps the Country Moving

New Zealand runs on liquid fuel. Every litre of petrol pumped into a commuter’s car in Auckland, every tank of diesel that powers a logging truck through the Urewera ranges, every load of jet fuel that lifts an Air New Zealand Dreamliner off the tarmac at Mangere, arrives in this country aboard a tanker ship from the other side of the world. Since April 2022, when the nation’s only oil refinery at Marsden Point ceased operations, New Zealand has imported one hundred percent of the refined fuel it consumes. That single fact has transformed the country’s energy security profile more profoundly than any policy decision in a generation.

The consequences of that transformation are now being felt with an urgency that would have seemed alarmist just months ago. In late February 2026, coordinated air strikes by the United States and Israel against Iran triggered retaliatory Iranian attacks across the Persian Gulf and the effective closure of the Strait of Hormuz, a narrow waterway through which roughly twenty percent of the world’s crude oil normally flows each day. For New Zealand, a country at the far end of the longest fuel supply chain in the developed world, the crisis has exposed vulnerabilities that successive governments have debated but never fully resolved.

This article is an attempt to lay out the complete picture of New Zealand’s fuel and gas situation as it stands in April 2026. It examines the storage infrastructure we have, the facilities we have lost, the plans that are being made, and the projections that will shape our fuel landscape for decades to come. It traces the journey of every litre from wellhead to forecourt, and it asks whether a country of five million people can continue to sustain itself on a model of total import dependence.

Where New Zealand’s Fuel Comes From

Before the Marsden Point refinery closed, New Zealand imported a mixture of crude oil and already refined products. Crude oil, predominantly sourced from the United Arab Emirates and other Middle Eastern producers, was shipped to the deep water port at Marsden Point in Northland, where the refinery converted it into petrol, diesel, jet fuel, and other products. The refinery supplied approximately seventy percent of the country’s refined fuel needs. The remaining thirty percent was imported directly as finished product from refineries in Singapore, Australia, and South Korea.

The closure of the refinery in 2022 ended the importation of crude oil entirely. Today, five fuel companies import refined product into New Zealand. The three major players are BP, Mobil, and Z Energy. Two smaller operators, Gull New Zealand and Timaru Oil Services (trading as Tasman Fuels), also bring product into the country. According to data from Stats NZ analysed by Infometrics, South Korea now provides approximately 48 percent of the value of fuel imported into New Zealand, based on figures covering the twelve months to March 2025. Singapore is the second largest source, contributing around 33 percent. Japan, Malaysia, and other Asian refiners account for the remainder.

The critical point, repeatedly emphasised by energy analysts and security researchers, is that these Asian refineries do not produce fuel from nothing. The refineries in South Korea and Singapore source the vast majority of their crude oil from the Persian Gulf, particularly from Saudi Arabia and the United Arab Emirates. This means that while New Zealand no longer buys oil directly from the Middle East, it remains completely exposed to disruptions in that region. The crude oil that becomes New Zealand’s petrol and diesel still begins its journey in the same Gulf oil fields, still passes through the same maritime chokepoints, and still depends on the same geopolitical stability that has now fractured.

Shipping times from the key refining centres to New Zealand are substantial. A cargo from South Korea takes approximately 17 days. From Singapore, the voyage is 17 to 18 days. From Japan, roughly 16 days. From India, should that become an alternative source, roughly 25 days. From the west coast of the United States, about 27 days. These transit times mean that any supply disruption takes weeks to be felt at the pump, but also that any recovery takes weeks to materialise. The lag works both ways.

How Much Fuel New Zealand Uses

According to the Ministry of Business, Innovation and Employment’s Energy in New Zealand 2025 report, New Zealand’s domestic transport sector accounts for almost three quarters of all domestic consumption of oil products. Associate Energy Minister Shane Jones stated in March 2026 that New Zealand consumes approximately 24 million litres of fuel per day in total, with nearly half of that being diesel, roughly a third petrol, and the remainder jet fuel and other products.

MBIE’s fuel stocks data, published twice weekly, provides more granular figures. The average daily demand for petrol is approximately 8.1 million litres. Diesel demand averages approximately 10.7 million litres per day. Jet fuel averages around 4.8 million litres daily. These figures place New Zealand’s total liquid fuel consumption at approximately 8.6 billion litres per year across the three main transport fuels.

Petrol

Petrol consumption in New Zealand has been declining. In 2024, petrol use for domestic transport decreased by 0.6 percent on 2023 levels. Usage remains below pre pandemic levels, a trend that may reflect lasting behaviour changes such as increased working from home. The government’s 2025 Fuel Security Study projects that petrol demand will continue to decline through to 2035, driven by improvements in vehicle efficiency and the gradual uptake of battery electric vehicles. Annual petrol consumption was approximately 2.9 billion litres in 2023, down from around 3.3 billion litres in 2017.

Diesel

Diesel tells a different story. Diesel is the most strategically important fuel by both volume and economic function. It powers the heavy vehicle fleet that moves freight across the country, underpins the agricultural sector (with up to 95 percent of farming machinery running on diesel), supports the construction and mining industries, and provides backup electricity generation during dry years when hydroelectric output falls short. In 2024, diesel use for domestic transport increased by 8.1 percent on 2023 levels and now sits 17.5 percent above 2019 figures. Annual diesel consumption reached approximately 3.8 billion litres in 2023. The government’s demand forecast projects that diesel consumption will level off around 2030 before beginning a gradual decline, but alternatives to diesel powered heavy transport remain less developed and are not yet cost competitive.

Jet Fuel

Jet fuel demand is the one category projected to grow for the foreseeable future. International aviation fuel use increased by 16 percent in 2024 compared to 2023, though it remained at only 92 percent of pre pandemic levels. Unlike petrol and diesel, there are very few viable alternatives to fossil jet fuel for long haul aviation. Sustainable aviation fuel exists as a concept and is being trialled globally, but production volumes remain tiny relative to demand. Annual jet fuel consumption was approximately 1.5 billion litres in 2023, and the government’s forecasts project continued growth through 2035.

New Zealand’s Fuel Storage Infrastructure

New Zealand’s fuel storage network consists of a series of coastal import terminals, inland distribution terminals, and the pipeline system connecting Marsden Point to Auckland. The system was designed around the assumption of regular, frequent deliveries by tanker ship, supplemented (until 2022) by continuous domestic refining output. It was never designed to hold large strategic reserves of the kind maintained by countries such as the United States, Japan, or members of the International Energy Agency in Europe.

The Terminal Network

According to MBIE, New Zealand has ten fuel import terminals and two inland terminals. The four main import terminals, capable of receiving medium sized ships carrying 40 to 50 million litres, are located at Marsden Point (Northland), Mount Maunganui (Bay of Plenty), Wellington (Seaview in the Hutt Valley), and Lyttelton (Canterbury). The smaller regional import terminals are located at Napier, New Plymouth, Nelson, Timaru, Dunedin, and Bluff. The two inland terminals are at Wiri in South Auckland and Woolston in Christchurch, which receive fuel by pipeline and road tanker respectively rather than directly from ships.

Marsden Point

Marsden Point is by far the largest and most strategically significant terminal in the country. Operated by Channel Infrastructure (the company formerly known as Refining NZ), the site handles between 3 and 3.5 billion litres of transport fuel annually, representing approximately 40 percent of New Zealand’s total fuel imports. This includes 80 percent of the jet fuel supplied to Auckland International Airport.

Channel Infrastructure’s Marsden Point facility utilises two deep water jetties capable of receiving some of the largest refined product tankers in the world, with ships carrying up to 120 million litres able to berth at the port. The site currently holds over 290 million litres of contracted fuel storage capacity, with Channel Infrastructure’s CEO Rob Buchanan confirming in March 2026 that the site had approximately 300 million litres of fuel in storage and the ability to roughly double that capacity by recommissioning disused tanks.

From Marsden Point, fuel is distributed in two ways. Road tankers service the Northland region directly. The critical link to Auckland, however, is the Marsden Point to Auckland Pipeline, a 170 kilometre, 250mm diameter underground pipeline that carries diesel, petrol, and jet fuel in controlled batches to the Wiri Terminal in South Auckland. Built in the 1980s as part of the refinery expansion, the pipeline traverses farmland, towns, and part of the Manukau Harbour. A shorter pipeline connects the Wiri Terminal to Auckland International Airport for jet fuel supply. The pipeline is designated under the district plans of three councils (Whangārei, Kaipara, and Auckland) and is protected by a corridor generally 12 metres wide.

In April 2026, Associate Energy Minister Shane Jones confirmed that the Government would allocate $21.6 million from the Regional Infrastructure Fund to convert former crude oil storage tanks at Marsden Point into diesel storage, providing an additional 90 million litres of capacity. Z Energy has separately committed $30 million to restore a 30 million litre tank for jet fuel storage at the site.

Wiri Terminal

The Wiri Terminal in South Auckland is operated by Wiri Oil Services Limited, a joint venture of BP, Mobil, and Z Energy. It is the primary distribution hub for the Auckland region, receiving fuel via the Marsden Point pipeline and distributing it by road tanker to service stations and commercial customers across the Auckland and Waikato regions. An adjacent truck loading facility, also owned by the three major fuel companies, sits on land owned by Channel Infrastructure.

Mount Maunganui

The Mount Maunganui terminal, operated by Terminals New Zealand (a sister company of Gull NZ), opened in 1999 on Hewletts Road. It has a total storage capacity of 90 million litres and is classified as an Upper Tier Major Hazard Facility. The terminal imports fully refined fuel and distributes it to the Bay of Plenty, Waikato, and central North Island regions.

NZOSL Terminals

New Zealand Oil Services Limited (NZOSL), a joint venture between BP and Worley, operates eight fuel storage and handling terminals across the country. Established in 1999, NZOSL provides services at Mount Maunganui, Napier, New Plymouth, Wellington, Nelson, Timaru, Dunedin, and Bluff. These sites receive fuel from tanker ships at adjacent ports and distribute it by road tanker. NZOSL terminals are classified as Major Hazard Facilities under the Health and Safety at Work Act, with the exception of diesel only facilities. The company works closely with WorkSafe New Zealand and maintains detailed Safety Cases for each site.

Wellington and Lyttelton

Wellington’s fuel storage is centred on the Seaview terminal complex in the Hutt Valley, adjacent to the port facilities. Lyttelton serves the Canterbury region and the wider South Island. Both are capable of receiving medium sized tanker ships. The Woolston inland terminal in Christchurch, connected to Lyttelton by road, provides additional storage and distribution capacity for the South Island.

Overall Storage Capacity

New Zealand does not maintain large strategic reserves in the manner of some other OECD countries. The system relies on regular shipments to keep supply steady, with stock levels fluctuating according to shipping schedules and seasonal demand patterns. As MBIE has repeatedly stated, the country’s storage capacity beyond the minimum stockholding requirements is limited.

The Minimum Stockholding Obligation, which came into force on 1 January 2025, requires fuel importers to hold minimum levels of fuel either onshore or within New Zealand’s exclusive economic zone. The mandated levels are 28 days’ cover of petrol, 21 days’ cover of diesel, and 24 days’ cover of jet fuel. The Government has signalled its intention to increase the diesel obligation to 28 days’ cover, with the change expected to take effect in July 2028.

As at 1 April 2026, MBIE’s fuel stocks update showed national fuel stocks of 61.9 days of petrol available (including both onshore stocks and fuel on vessels within the exclusive economic zone), 51.5 days of diesel, and 50.1 days of jet fuel. However, onshore figures alone tell a more sobering story. In country stocks have fluctuated around 28 to 33 days for petrol, 22 to 28 days for diesel, and 25 to 33 days for jet fuel throughout March and early April 2026.

Natural Gas Production and Storage

New Zealand’s natural gas sector operates entirely separately from the liquid fuels supply chain, but it plays a critical role in the country’s broader energy security. All of New Zealand’s natural gas is produced domestically, from fields concentrated in and around the Taranaki region on the west coast of the North Island. Unlike liquid fuels, New Zealand has no facilities to import or export natural gas, which means that domestic production must match domestic demand.

The Taranaki Fields

Taranaki has been New Zealand’s hydrocarbon province since the country’s first oil discovery in the 1860s and the major commercial gas find at Kapuni in 1959. The Kapuni gas field in South Taranaki was brought into production in 1970, and the North Island natural gas network began operating the same year, initially supplying gas to Auckland, Hamilton, New Plymouth, Wanganui, Palmerston North, and Wellington.

The giant offshore Maui field, discovered in 1969 and brought into production in 1978, transformed New Zealand’s energy landscape. Maui gas supported the development of gas fired power stations at New Plymouth and Huntly, an ammonia urea plant at Kapuni, a gas to methanol plant at Waitara, and the synthetic petrol plant at Motunui. Over 80 percent of New Zealand’s gas production today comes from just four fields. Pohokura, operated by OMV with Todd Energy as a joint venture partner, is the largest single contributor. The others are Maui, Kupe (operated by Beach Energy), and Mangahewa (operated by Todd Energy and Greymouth Petroleum).

Gas supply in 2024 was 115.70 petajoules, a decrease of 20.9 percent on 2023 levels, according to MBIE’s Energy in New Zealand 2025 report. This substantial decline was driven primarily by natural field decline, with the Maui and Pohokura fields showing the most significant drops in output. Several fields failed to meet their production expectations during the year. Total gas use in the economy in 2024 was 117.73 petajoules, a decrease of 22 percent on 2023, driven largely by reduced operations at Methanex’s methanol production facility in Taranaki.

New Zealand’s natural gas reserves as at 1 January 2025 were estimated to be 948 petajoules, a drop of 27 percent on the previous year’s figures. Forecast production profiles indicate continued decline throughout the coming years. This declining trajectory has become one of the most pressing energy security issues in the country, affecting not just heating and industrial use but also electricity generation, since gas fired power stations provide essential backup capacity for the national grid during periods of low hydro inflows.

New Discoveries and Developments

There have been some positive developments. In late 2024, Greymouth Petroleum announced a substantial gas discovery in the onshore Turangi field in northern Taranaki. In December 2024, the New Zealand Energy Corporation and L&M Mining tapped a new supply in the existing Tariki field. In March 2025, a successful joint venture at the Pohokura Onshore Well Number 5, between operator OMV and Todd Energy, was anticipated to deliver about 4 petajoules of gas per annum. In March 2026, the New Zealand Energy Corporation reported that its Ngaere 1 well in Taranaki produced approximately 580 barrels of oil within the first six hours of operation after perforation, with production stabilising at around 120 barrels per day.

Gas Transmission and Distribution

New Zealand’s gas transmission network consists of approximately 2,600 kilometres of high pressure pipelines across the North Island, owned and operated by First Gas (now part of the Clarus group). The network includes the Maui pipeline, a 307 kilometre trunk line that carries approximately 78 percent of all natural gas produced in New Zealand. There is no natural gas transmission in the South Island. Low pressure distribution networks that deliver gas to end users are owned by First Gas (Northland, Waikato, Bay of Plenty, Gisborne, Kapiti Coast), Vector (Auckland), Powerco (Hawke’s Bay, Taranaki, Manawatu, Wellington), and GasNet (Whanganui). Natural gas is supplied to approximately 290,000 residential customers across New Zealand, as well as commercial users including restaurants, hotels, and hospitals.

Ahuroa Gas Storage

New Zealand’s only large scale underground gas storage facility is the Ahuroa Gas Storage Facility, located in the Taranaki region. The facility was originally developed by Contact Energy and Origin Energy using a depleted natural gas reservoir, and was commissioned in 2011 at a development cost of $177 million. In 2018, it was sold to Gas Services New Zealand (now Flexgas, a subsidiary of Clarus, formerly First Gas) for $200 million.

In 2020, Flexgas completed a major upgrade to the facility, increasing its capacity and flexibility. The upgrade was completed during the COVID 19 lockdown period, a significant engineering achievement accomplished without the overseas expertise that would normally be used for such a project. The facility’s capacity is approximately 18 billion standard cubic feet, and its storage is fully contracted to two parties, Contact Energy and Nova Energy. Flexgas has estimated that the expanded capacity at Ahuroa can provide the equivalent daily energy output of 400,000 Tesla Powerwall batteries, a comparison that underscores both the scale of gas storage and the enormous cost differential with battery alternatives (the equivalent battery installation would cost approximately $7.1 billion).

Ahuroa serves a critical function in New Zealand’s electricity system. It stores gas during periods of low demand and releases it when needed, particularly during dry years when hydro generation is constrained. This allows gas fired power stations, such as the Stratford peaking plant, to operate when the electricity grid requires additional capacity.

Tariki Gas Storage Project

A second gas storage facility is being developed by the New Zealand Energy Corporation at the Tariki field in Taranaki. The company has confirmed the viability of the Tariki reservoir for gas storage, with a recently completed well intersecting the target sands 11 metres higher than prior wells and confirming the presence of significant remaining free gas and condensate. The Tariki Gas Storage Stage 1 is being accelerated to enable the commencement of gas injection. The company noted in early 2025 that wholesale gas prices in New Zealand had increased substantially since 2017, from approximately $6.40 per thousand standard cubic feet to more than $14, with seasonal price volatility becoming much greater, peaking at more than $40 per thousand standard cubic feet in winter 2024. This price volatility makes additional gas storage capacity an increasingly compelling investment.

LPG

Liquid petroleum gas is another important part of New Zealand’s energy mix, particularly in areas where reticulated natural gas is not available. LPG is produced during the processing of natural gas at Taranaki facilities and distributed by companies including Liquigas and Rockgas, both based in the Taranaki region. At peak production, the Kupe field alone was predicted to meet approximately 50 percent of New Zealand’s LPG demand. LPG is widely used for heating, cooking, hot water systems, and industrial processes in rural and off grid areas.

Domestic Oil Production

It is a common misconception that New Zealand does not produce oil. In fact, the country has a modest but established oil production sector, centred entirely in the Taranaki region. The critical qualification, however, is that virtually all crude oil produced in New Zealand is exported, primarily to refineries in Australia and Singapore. This has been the case since long before the Marsden Point refinery closed. Even when the refinery was operating, just two percent of its crude oil feedstock came from New Zealand wells. The domestic crude is a light, sweet grade that was not well suited to the refinery’s processing configuration, which was designed for the medium sour blends typical of Middle Eastern producers.

Crude oil production in 2024 totalled 694.83 kilotonnes, a decrease of 14 percent on 2023 figures, according to MBIE. Most fields saw decreases in year on year production due to ongoing natural decline. The Maari field, located approximately 80 kilometres offshore, was the largest contributor to crude oil production in 2024, comprising 32 percent of all output. Other significant producing fields include Pohokura, Kupe, and Maui.

Oil from New Zealand’s onshore fields is transported by pipeline or road tanker to storage and export facilities at Port Taranaki. Offshore, oil from fields such as Maari is collected directly from floating production, storage, and offloading vessels and exported by tanker to international markets.

The Exploration Ban and Its Reversal

In April 2018, the Labour led government announced a ban on issuing new offshore oil and gas exploration permits outside of onshore Taranaki, as part of its climate strategy for transitioning away from fossil fuels. The ban was enacted through the Crown Minerals (Petroleum) Amendment Act 2018, supported by the Green Party as a coalition partner. Existing permits were not affected.

The ban had a chilling effect on exploration investment. By 2021, the last deep sea oil and gas exploration permit outside Taranaki, held by NZOG in the Great South Basin, had been surrendered. The industry body Energy Resources Aotearoa and Resources Minister Shane Jones have both attributed the decline in gas production partly to the investment uncertainty created by the ban, although Labour’s former Energy Minister Megan Woods has pointed out that exploration in New Zealand was already declining before 2018, in line with global trends.

On 5 August 2025, the Crown Minerals Amendment Act 2025 came into force, reversing the ban. The Act removes the prohibition on new oil and gas exploration permits beyond onshore Taranaki, changes the purpose of the Crown Minerals Act from “manage” to “promote” prospecting, exploration, and mining of Crown owned minerals, and introduces greater flexibility in the decommissioning liability regime. The Government allocated $200 million over four years through Budget 2025 to co invest in the development of new gas fields. Applications for new exploration permits opened under a new open market competitive process from late September 2025.

Government officials have acknowledged that new gas fields are unlikely to be developed before 2035, meaning the reversal of the ban offers no immediate relief for current supply pressures.

The Marsden Point Refinery

A Brief History

The story of the Marsden Point oil refinery is, in many ways, the story of New Zealand’s relationship with energy independence. In the late 1950s, the Nash Labour government began investigating the construction of a domestic oil refinery. In May 1959, the government announced that a refinery would be built. Shell was engaged to provide 60 percent of the capital. Several sites were considered, including Nelson, Lyttelton, and areas near Auckland. Marsden Point was ultimately chosen for its deep water harbour, proximity to the main North Island population centres, low earthquake risk, and the availability of suitable industrial land.

Construction began in 1962 under engineering contractor Bechtel, and the refinery commenced operations in 1964 at a cost of £10 million. The New Zealand Refining Company was established as a consortium of major oil companies, including Shell, BP, Caltex, Mobil, and Europa, along with the New Zealand public.

A major expansion was approved in May 1973 and completed on 30 May 1986 at a final cost of $1.84 billion. This expansion doubled refined oil production while increasing crude intake by only 25 percent, through the installation of a hydrocracker and other advanced processing units. Further modifications over the following decades included removing lead from petrol, reducing sulphur dioxide emissions, and the $180 million Future Fuels project in 2005 for cleaner fuel production. In 2009, the Point Forward project increased capacity on the principal crude distillation unit, and in 2015 the Te Mahi Hou project increased petrol production by around two million barrels per annum.

In 1988, the Petroleum Sector Reform Act deregulated the energy industry, and the Government relinquished its shareholding. New processing agreements with the oil companies allowed the refinery to establish a cost competitive position in the deregulated market.

The Decision to Close

The refinery’s viability came under increasing pressure from around 2018 onwards. Large new export refineries in Asia, particularly in South Korea, China, and India, operated at vastly greater scale and with more modern technology, producing refined product at lower cost than Marsden Point could match. Global refining overcapacity in the Asia Pacific region drove margins to historically low levels.

In August 2020, Refining NZ announced it was considering converting to an import only operation. The COVID 19 pandemic had exacerbated already poor refining margins and reduced demand sharply. In August 2021, shareholders voted overwhelmingly in favour of the conversion. On 22 November 2021, the Board confirmed the final investment decision after signing long term terminal services agreements with BP, Mobil, and Z Energy. Refining operations ceased on 31 March 2022. The last crude oil shipment had been offloaded from the tanker Torm Ingeborg on 8 March 2022.

The company was renamed Channel Infrastructure. The workforce dropped from approximately 310 employees to around 60, with hundreds of contracting jobs in the wider Northland region also lost. The conversion was forecast to cost between $200 million and $220 million over five to six years, with up to $60 million spent on demolition. The refinery process equipment was subsequently dismantled.

The decision was a commercial one made by shareholders, not a government directive. Then Energy and Resources Minister Megan Woods investigated the closure’s impact on fuel security and received expert advice suggesting that importing fuel from multiple different refineries was more resilient to most disruption scenarios than relying on a single domestic refinery that could itself be knocked out by power cuts, natural disasters, or equipment failure. The Government considered subsidising the refinery to keep it running for a further five to ten years but concluded there were no clear fuel security concerns to justify the cost.

The irony is not lost on critics. Refining NZ reported a negative 6.8 percent compound annual total shareholder return during its last decade of refinery operations. Since transitioning to an import terminal, Channel Infrastructure has reported a 28.9 percent compound annual total shareholder return. The terminal business has been a much better commercial proposition. But the loss of domestic refining capacity has left the country exposed in ways that commercial returns cannot remedy.

Could the Refinery Be Rebuilt?

This question has dominated public debate since the Strait of Hormuz crisis erupted in February 2026. The answer, according to every credible assessment, is that rebuilding is technically possible but financially and practically prohibitive.

In 2024, Channel Infrastructure commissioned Worley, the Australian engineering consultancy, to assess the capital cost of recommissioning a refinery at Marsden Point. Worley’s assessment put the cost at between $4.9 billion and $7.3 billion. A separate review of global benchmarks for refinery construction suggested costs could range from $5.9 billion to $16.1 billion before accounting for unique aspects of the Marsden Point site that might reduce the figure. Even the lower estimate of $4.9 billion represents an enormous capital commitment for a country of New Zealand’s size.

Beyond the cost, there are fundamental practical obstacles. The refinery processing equipment has already been dismantled. Channel Infrastructure has noted that its proposed biorefinery project and solar farm development at the Marsden Point site would likely necessitate any re established fossil fuel refinery being located at an alternative position on the site, further increasing costs. The timeline for construction would be at least six years, meaning a rebuilt refinery could not be operational before the early 2030s at best.

Perhaps most importantly, Channel Infrastructure’s CEO Rob Buchanan has repeatedly pointed out that having the refinery open would not address the current crisis. The refinery ran almost entirely on imported crude, 98 percent of which came from the Middle East. If the Strait of Hormuz is closed, crude oil supply would be disrupted just as severely as refined product supply. Even Deputy Prime Minister David Seymour supported this analysis, noting that shareholders closed the refinery because it was more expensive to refine at Marsden Point than at refineries elsewhere.

The MBIE fuel security study commissioned in 2024 concluded that the most cost effective strategies for enhancing fuel resilience are accelerating the transition to zero emissions vehicles, increasing trucking capacity to provide redundancy against infrastructure failures, and increasing diesel and jet fuel storage levels.

Alternative Sources of Liquid Fuel

The question is not only where New Zealand can obtain conventional petrol, diesel, and jet fuel beyond its current South Korean and Singaporean suppliers, but whether the country can develop domestic production of liquid fuels that would reduce its dependence on imports altogether.

Diversifying Import Sources

New Zealand’s fuel companies have established term contracts with refineries in South Korea and Singapore, providing a degree of supply certainty. However, the Hormuz crisis has revealed the fragility of this arrangement. Other potential sources of refined fuel include India (which has the world’s fourth largest refining capacity but is also tightening exports), the United States (which has massive refining capacity on the Gulf Coast but is geographically distant and facing its own tightening market), Japan, Taiwan, and Brunei.

Each alternative comes with complications. The US west coast refining capacity is shrinking. Phillips 66 ceased operations at its 139,000 barrel per day Los Angeles refinery at the end of 2025. Valero is idling its 150,000 barrel per day Benicia refinery. China banned exports of refined fuel products in March 2026 to protect its own domestic supply. South Korea has restricted refined fuel exports to 2025 levels, preventing stockpiling by foreign buyers. Thailand suspended crude and petroleum exports and introduced driving restrictions. The pool of available sellers is shrinking precisely when demand for alternative sources is greatest.

Biofuels

Biofuels represent the most promising near term option for domestically produced liquid fuel. According to MBIE, current biofuel use in New Zealand is very low and there is limited domestic production. The Government’s Fuel Security Plan identifies biofuels as a key area for development, noting that advanced biofuels such as renewable diesel are chemically identical to fossil fuels and can be used in existing vehicles and fuel infrastructure without modification.

New Zealand has a fledgling biodiesel industry. NZ Biofuels operates the only HSNO certified biodiesel production site in the country, with capacity to produce approximately 1.5 million litres annually on a single shift basis, with the ability to scale up. The Bioenergy Association of New Zealand has identified considerable potential for liquid biofuel production using the country’s substantial forestry sector as a feedstock source.

Scion, the Crown research institute, produced a biofuels roadmap identifying pathways for large scale biofuel production using forestry residues, agricultural byproducts, and organic waste. The roadmap suggested that substituting 30 percent of New Zealand’s liquid fuel consumption with biofuels would remove five million tonnes of carbon emissions, reduce oil imports by 30 percent, and stimulate regional economies.

The most significant biofuel development is the proposed biorefinery at the Marsden Point site. In October 2024, Channel Infrastructure announced a conditional agreement with Seadra Energy and a consortium of partners, including Qantas and Air New Zealand, to develop a biorefinery producing sustainable aviation fuel, hydrotreated vegetable oil, and other biofuels. The project would repurpose some of the decommissioned refinery assets and leverage existing storage tanks, jetties, and infrastructure. A final investment decision is expected in 2026. Channel’s CEO has emphasised the advantage that the feedstock for the biorefinery would be domestic, avoiding the import dependency that characterised the fossil fuel refinery.

The previous Labour government announced plans for a Sustainable Biofuels Mandate in 2021, targeting a 1.2 percent greenhouse gas reduction in 2023 ramping up to 9 percent by 2035, but this was not implemented before the change of government. The current government’s Fuel Security Plan includes actions to introduce a new standard for renewable diesel and to investigate regulatory barriers to alternative fuels in the aviation and shipping sectors.

Other Domestic Options

Beyond biofuels, the Government is exploring the role of Special Economic Zones to facilitate projects that enhance fuel security. The Fast Track consenting regime has been identified as a mechanism to accelerate the approval of critical energy infrastructure. The Government has also flagged the possibility of using IEA fuel tickets (New Zealand’s allocation of emergency oil reserves held collectively by IEA member countries) and offshore storage options to bolster reserves.

In the gas sector, the possibility of importing liquefied natural gas has been investigated on multiple occasions. In 2006, Contact Energy and Genesis Energy established the Gasbridge joint venture to develop an LNG import terminal, initially at Port Taranaki and later proposed as an offshore floating facility. The project did not proceed. More recently, MBIE’s NZ Battery study considered the role of a floating storage and regasification unit as a backup gas supply option, with WSP estimating lifetime costs in the order of $2 billion.

The 2026 Fuel Crisis

The theoretical debates about fuel security became urgently practical on 28 February 2026. On that day, the United States and Israel initiated coordinated air strikes against Iran, targeting military facilities, nuclear sites, and leadership targets. Iran’s Supreme Leader Ali Khamenei was killed in the strikes. Iran responded with missile and drone attacks across the Persian Gulf, striking energy infrastructure in Saudi Arabia, the UAE, Qatar, Kuwait, Bahrain, and Oman. Iran’s Revolutionary Guards broadcast VHF warnings that no vessel may transit the Strait of Hormuz.

The International Energy Agency described the resulting disruption as the largest in the history of the global oil market. Major shipping lines withdrew from the strait. Insurance markets effectively priced commercial transit out of the question. By mid March, Brent crude had surged past $100 per barrel for the first time since 2022. Analysts and traders warned of potential spikes to $170 or even $200 per barrel if the disruption persisted.

For New Zealand, the consequences began arriving almost immediately through prices. According to the fuel tracking service Gaspy, petrol increased by approximately 35 percent and diesel by more than 87 percent in the weeks following the outbreak of hostilities. Jet fuel prices roughly doubled, prompting Air New Zealand to suspend its earnings guidance.

The Government released a four phase Fuel Response Plan in late March 2026. Phase 1 (the current phase as of early April) involves monitoring, information campaigns, and supporting the market to function normally. Phase 2 involves closer coordination between Government and industry and voluntary demand management. Phases 3 and 4 involve increasingly severe demand restraint measures, potentially including fuel rationing under the Petroleum Demand Restraint Act 1981. The Government has emphasised that introducing restrictions before a genuine shortage materialises would not create more fuel in the system and could disrupt the normal commercial operations that keep fuel flowing.

On 8 April, a temporary ceasefire was agreed between Iran and the United States. However, the Strait of Hormuz remained effectively closed, with Iran limiting the number of ships that could cross and charging transit fees. The situation remains fluid and uncertain.

New Zealand’s fuel stocks as at early April 2026 show sufficient coverage for the immediate term, with the total stock position (onshore plus on water) above the minimum stockholding obligations for all three fuel types. But the trajectory is what concerns analysts. If the strait remains closed or restricted for an extended period, the lag between disruption and impact means that New Zealand could face genuine shortages within weeks to months, not years.

Government Policy and the Fuel Security Plan

The Government’s Fuel Security Plan, released in November 2025, sets out a medium to long term strategic vision for New Zealand’s fuel system. The plan was developed in response to the 2025 Fuel Security Study commissioned from consultants Envisory and Castalia and peer reviewed by Beca Ltd. It is also a commitment under the New Zealand First and National coalition agreement to safeguard transport and logistics systems.

The plan is built around three focus areas. The first is strengthening domestic resilience through improved information disclosure, reviewing the minimum stockholding obligation regulations in 2026, implementing location specific stockholding requirements (such as for jet fuel at Auckland Airport), and testing the National Fuel Plan through annual exercises. The second is improving the fuel supply chain, including engaging with fuel companies to ensure sufficient alternative distribution capacity such as fuel trucks and drivers. The third is supporting domestic alternatives, including biofuels, renewable diesel, sustainable aviation fuel, electric vehicle infrastructure, and alternative fuels for heavy vehicles and shipping.

Critics, including researchers at Laloli Research and the Adapt Research collective, have pointed out that the plan lacks volumetric quotas, allocation formulas, and a tiered triage system for rationing fuel to critical customers in the event of a sustained shortage. The National Fuel Plan lists 14 critical customer categories but explicitly states they are not in priority order. Without a pre agreed quantified framework, allocation during a crisis defaults to ad hoc decision making under pressure.

The Government’s decision on additional diesel storage has followed a winding path. In 2023, the Labour government planned to use public funds to purchase and hold 70 million litres of diesel, approximately seven days’ supply, at a cost of approximately $84 million. After the change of government, Associate Energy Minister Jones initially shelved this plan and commissioned fresh analysis. The new experts confirmed that diesel was indeed the fuel most likely to run short during a sustained 90 day disruption. In May 2025, Jones announced a revised plan requiring private fuel companies to bear the cost of increasing diesel stockholding to 28 days’ cover, with the change not taking effect until July 2028. In April 2026, with the Hormuz crisis underway, the Government accelerated plans to convert former crude tanks at Marsden Point for diesel storage.

Looking Ahead

The Ministry of Business, Innovation and Employment’s demand forecasts, produced as part of the 2025 Fuel Security Study, project distinctly different trajectories for each of the three main transport fuels.

Petrol demand is expected to continue declining through to 2035 and beyond, driven by improving vehicle efficiency, the gradual shift to battery electric vehicles, and changing work and commuting patterns. The rate of decline will depend heavily on EV uptake, which in turn depends on government policy, charging infrastructure availability, and relative pricing of electric versus internal combustion vehicles. Under the previous government’s Clean Car Discount scheme, EV fleet growth exceeded 50 percent per year. When the current government ended that scheme at the close of 2023, growth collapsed to under 10 percent.

Diesel demand is forecast to level off around 2030 before beginning a gradual decline. The alternatives for heavy transport, construction, agriculture, and other diesel dependent sectors remain less mature than for light passenger vehicles. Battery electric trucks are emerging but are not yet cost competitive for many applications. Hydrogen fuel cell vehicles remain in early development. Renewable diesel and biodiesel blends offer the most promising near term pathway for reducing diesel imports, as they can be used in existing engines and infrastructure.

Jet fuel demand is the one category projected to grow continuously through 2035. Long haul aviation has no commercially viable alternative to liquid hydrocarbon fuel at present. Sustainable aviation fuel is being developed and trialled, including through the proposed Marsden Point biorefinery, but global SAF production remains a tiny fraction of total jet fuel consumption. Air New Zealand has set a 10 percent SAF target for 2030 but acknowledged that sourcing sufficient supply will be a challenge.

In the natural gas sector, the outlook is defined by decline. Reserves as at 1 January 2025 were estimated at 948 petajoules, down 27 percent in a single year. Production has been falling faster than expected, driven by natural field decline across most producing fields. The Government’s $200 million co investment fund for new gas field development and the reversal of the offshore exploration ban are intended to stimulate new investment, but even optimistic timelines suggest new fields will not be producing before 2035. In the meantime, the Methanex methanol plant in Taranaki, which is the single largest user of natural gas in New Zealand, faces ongoing uncertainty about its long term future, and its decisions about whether to operate or idle production capacity will continue to have outsized effects on the balance between gas supply and demand.

A Country at the End of the Line

New Zealand in April 2026 finds itself at a crossroads that has been decades in the making. The country dismantled its only oil refinery, allowed its domestic gas reserves to decline without investing adequately in new exploration, deferred decisions on strategic fuel storage for years, and made itself entirely dependent on a global supply chain that extends from the Persian Gulf through Asian mega refineries and across some of the longest sea routes in commercial shipping.

The infrastructure that exists is functional but not generous. Twelve terminals scattered around the country’s coastline, a single 170 kilometre pipeline to Auckland, and tank farms that were designed for continuous restocking rather than strategic reserve holding. The minimum stockholding obligations provide a buffer, but one measured in weeks rather than months. The natural gas system depends on ageing fields in decline, a single underground storage facility, and a transmission network that serves only the North Island.

The current crisis has injected urgency into policy debates that had previously moved at a glacial pace. The Government is converting crude tanks to diesel storage, accelerating plans for additional stockholding obligations, investing in biofuel development, and reversing the ban on offshore exploration. But these measures will take years to deliver results. Converting tanks takes months. Building a biorefinery takes years. Developing new gas fields takes a decade. The gap between the urgency of the crisis and the timelines for structural change is the central challenge facing New Zealand’s energy policymakers.

What is clear is that the era of taking fuel supply for granted is over. The tanker ships will continue to arrive, at least for now. The prices will fluctuate. The political arguments about who is responsible for the current vulnerability will continue. But the underlying reality is unchanged. New Zealand is an island nation at the end of the longest fuel supply chain in the developed world, and every litre of fuel that keeps this country moving arrives here only because a complex chain of production, refining, shipping, and storage continues to function without interruption. The events of 2026 have shown how fragile that chain can be.

Sources and References

• Ministry of Business, Innovation and Employment, Energy in New Zealand 2025
• MBIE, Fuel Security Plan, November 2025
• MBIE, Fuel Security Study, Interim Report on Reestablishing the Marsden Point Refinery, Envisory and Castalia, 2025
• MBIE, About Our Fuel System
• MBIE, Oil Statistics and Gas Statistics
• MBIE, Fuel Stocks Update, multiple editions, March and April 2026
• MBIE, Middle East Conflict and New Zealand’s Fuel Stocks
• Channel Infrastructure, Terminal and Pipeline Services
• Channel Infrastructure, Our History
• Worley, Marsden Point Recommissioning Study, September 2024
• Crown Minerals Amendment Act 2025, New Zealand Legislation
• MBIE, Biofuels and the Sustainable Biofuel Obligation
• New Zealand Petroleum and Minerals, Crown Minerals Act Law Changes
• Infometrics, Where Does Our Fuel Come From, May 2025
• NZ Ministry of Foreign Affairs and Trade, Trade and Economic Implications of the Iran Conflict, March 2026
• Clarus/Flexgas, Ahuroa Gas Storage Facility Upgrade
• Gas Industry Company, Gas Storage
• New Zealand Energy Corporation, operational updates, February and March 2026
• Venture Taranaki, Natural Gas
• Beach Energy, Taranaki Basin
• Stats NZ trade data, cited via Infometrics analysis
• NZOSL, Who We Are and Locations
• Terminals New Zealand, About Us

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