New Zealand is racing to add diesel buffer at Marsden Point, with Channel Infrastructure crews working seven days a week to have an extra 93 million litres of storage ready before June. The push reflects how much has changed in the country’s energy security thinking since the Iran conflict disrupted shipping through the Strait of Hormuz and sent fuel prices to record highs.
The government signed a contract with Channel Infrastructure NZ, the operator of New Zealand’s largest fuel import terminal, after senior ministers allocated up to $21.6 million from the Regional Infrastructure Fund. The additional storage adds roughly nine days’ worth of national diesel demand to New Zealand’s reserves and runs under contract until 31 December 2027.
The need for the deal is rooted in the structure of New Zealand’s fuel supply chain. More than 90 percent of the country’s petroleum comes from a small group of Asian refiners — South Korea accounts for roughly 45 percent, Singapore 34 percent, Malaysia around 8 percent, and Japan another 5 percent. Those refiners draw more than three-quarters of their crude from countries bordering the Persian Gulf. When the Strait of Hormuz came under pressure from the Iranian conflict earlier this year, the indirect exposure ran straight through to New Zealand pump prices.
The numbers were stark. Diesel prices surged 42.6 percent between February and March 2026, the sharpest monthly rise on record. Petrol rose 18.6 percent over the same period. Brent crude, sitting around US$70 a barrel before the crisis, climbed to peaks above US$119 in March. The International Energy Agency directed member countries to release emergency petroleum reserves in March, and New Zealand released six days’ worth of national supply into the market in response.
Associate Energy Minister Shane Jones said diesel deserved particular focus when the government assessed how to respond. “While we are acutely aware of the importance of petrol and jet fuel, it is diesel that is the lifeblood of our economy,” Jones said. The minister’s point reflects where diesel sits in the productive economy. Trucks carry the goods, tractors run the farms, excavators move the earth, and generators keep factories and hospitals running when the grid is stretched. A diesel shortage does not stay in one sector — it compounds.
The Marsden Point site at Whangarei was the natural candidate for expanding storage quickly. It was New Zealand’s sole oil refinery for five decades before Refining NZ converted it to an import terminal in 2022, ending domestic refining entirely. That conversion left a number of storage tanks idle at the site, and the government’s deal with Channel Infrastructure brings them back into service without requiring the kind of greenfield investment that would otherwise take years.
Channel Infrastructure chief executive Rob Buchanan described the arrangement as a “unique and expedient solution” to the challenge of building storage capacity quickly. He said the company applauded “the government’s decisive action to secure the critical fuels New Zealand needs to keep the economy moving.” Channel has engaged its team and contractors at the site, running across a seven-day week to meet a 31 May target. The work involves cleaning the dormant tanks, installing new linework to connect them to Channel’s active diesel infrastructure, and fitting instrumentation and pumping systems. A standard full refurbishment of this type would normally take 18 to 24 months. Channel is targeting completion in a fraction of that time.
The financial arrangement gives Channel a reliable revenue stream from the additional capacity. Once the tanks are operational, the company expects to earn approximately $1.2 million a month through to December 2027, adding around $8 million in revenue for the 2026 year. Channel is funding the refurbishment from within its existing debt facility, with the government providing cost reimbursement if it withdraws from the contract before capacity becomes available. The company’s earnings guidance for 2026 — $95 to $100 million before interest, tax, depreciation and amortisation — remains unchanged.
Before the deal was announced, New Zealand held 45.4 days of diesel reserves. Including tankers already at sea heading to New Zealand ports, the through-in-transit position was around 51.5 days of diesel supply as of early April. Ministers judged that margin needed strengthening given continuing uncertainty around the Strait of Hormuz and the real possibility of further disruptions before the conflict is resolved.
For the industries most exposed to a diesel shortage, the Marsden Point expansion offers some reassurance. Agriculture, trucking, construction and road freight all depend on uninterrupted diesel supply to keep operating. Even a disruption measured in days can cascade quickly through supply chains that have little slack built in. The expanded storage does not eliminate the risk, but it buys time for the government to respond if tanker deliveries are delayed or another wave of price shocks hits the market.
The deal also illustrates a shift in how policymakers think about New Zealand’s import terminal infrastructure. The conversion of Marsden Point from refinery to terminal was controversial at the time, with critics arguing it reduced New Zealand’s ability to absorb supply shocks. The current government has not moved to reverse that decision, but the rapid contracting of additional storage capacity at the same site suggests it is serious about managing the consequences. Whether similar arrangements will be sought at other storage facilities remains an open question, but for now Marsden Point is where the work is happening — and the deadline is six weeks away.
Share your thoughts on New Zealand’s fuel resilience strategy in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
Leave a Reply