Regional Development Minister Shane Jones says the Government will consider creating a Special Economic Zone to support an energy precinct at the former Marsden Point oil refinery.
A Special Economic Zone (SEZ) is an area with different business and trade laws from the rest of the country, typically offering tax breaks, simplified regulations, and special infrastructure support to attract investment and boost economic growth.
Successful examples include Shenzhen, China, which transformed from a small fishing village into a global manufacturing hub, and Dubai’s Jebel Ali Free Zone, which helped establish the UAE as a major logistics and trade centre.
The United Kingdom has also experimented with a kind of SEZ called Freeports, which were designed to revitalise former industrial areas and spread economic activity beyond London.
In a press release on Tuesday, Jones announced that Cabinet would discuss SEZs within the next four months. These zones could feature “business-friendly regulations, infrastructure, investment support, and customs and trade facilitation.”
Fuel security
The announcement follows a fuel security study that found New Zealand is vulnerable to oil supply chain disruptions, potentially costing up to $2.4 billion.
The report said this vulnerability existed before the Marsden Point refinery converted into an import terminal in 2022, but its closure reduced New Zealand’s crude oil stock buffer and increased reliance on refined fuel imports.
Reopening Marsden Point would be too costly and wouldn't significantly improve resilience, but the site could be redeveloped for biofuel or hydrogen production, it said.
Channel Infrastructure, which owns the import terminal, released a concept for an energy precinct that included a biofuel refinery and additional fuel storage. It also proposes establishing an LNG import terminal, which the Government wants built.
“If SEZs can help smooth the path for prospective investors and tenants, the Government is willing to consider them, along with other options,” Jones said.
A consortium of investors, including energy companies from Japan and the United Arab Emirates, is exploring the option of building a biofuel refinery. It has signed a conditional agreement for the deal, but would need to raise significant capital to go ahead.
Marsden Point already has an energy precinct zoning under the Whangārei District Plan but an SEZ could potentially offer reduced corporate tax rates and duty-free fuel imports.
As the Government has already established fast-track legislation, which could be used for resource consents, the site isn’t likely to need many new zoning rules.
Do SEZs work?
Jones said SEZs could also be used to support other strategic locations where it would be in New Zealand’s economic interest to make it easier to invest or operate a business.
However, special economic zones have a mixed reputation abroad. Research by the Centre for Economic Policy in 2024 found that only 40% of SEZs in countries where the European Bank for Reconstruction and Development operated were successful.
A 2017 study by the World Bank found that special zones generally did not grow faster than the national average and those that did grow tended to lose momentum over time.
Another academic study argued SEZ policies did attract foreign investment but those businesses were more motivated by infrastructure and location than financial incentives.
"However, countries need to be cautious not to overly rely on them as a magic ‘potion’: SEZ policies will not work in every context nor will copying other countries’ experiences guarantee success," the authors wrote.
"A good industrial infrastructure together with a strategic location and service provision within the zones draw investment. Fiscal incentives, by contrast, have a limited influence on investment decisions."
Shane Jones’ office has been approached for further comment.
31 Comments
...vulnerability existed before the Marsden Point refinery converted into an import terminal in 2022, but its closure reduced New Zealand’s crude oil stock buffer and increased reliance on refined fuel imports.
Another brilliant move by economic saboteurs The Labour Party.
Helen Clark’s government had the backbone and presence of mind to buy back both AIr NZ & Kiwi Rail. Likely it grated but the realisation was that NZ needed to have itself, a functioning airline and railway network. It’s a pity Bolger’s government didn’t think to make the same decision over the troubled Bank of NZ. Marsden point was built up by Muldoon’s government at over then $ billion cost. I don’t know what government sold all of it off to private interests. But if like those previous examples, it was still of prospective worth surely it could have been bought back and where it would be inoperative mothballed in case of future need, rather than being rendered unusable.
Muldoon's government understood the big picture - which is why Motunui.
Those who don't understand (or choose to avoid) the big picture, make comments like this: 'potentially costing up to $2.4 billion'.
2.4 billion what? If there's no energy coming in, 2.4 billion nothings, is what. And over what timeframe? Energy lack-of-supply, if permanent, means the marking-to-zero of ALL wealth tokens. And fossil energy supply, globally has the problem that at this half-way-through-the-resource stage, there is ever-less chance that a business-case can be made for refineries etc. There are enough already existing, to process the remaining half (there will never be as big a flow-rate).
As for hydrogen - that's an energy-negative; a vector not a source. Either nat gas or vast quantities of electricity - already allocated electricity, coming from the other end of the country - are needed to crack it. It is more energy-efficient to use the gas or electricity straight. So there will never be an unsubsidised business-case - so watch for the funding for NZF...
The business nous of Treasury unfortunately seems irrevocably swayed by the freedom that it concerns only other people’s money, for want of a better cliche. A previous example was the directives to restrict EQC, during the Canterbury earthquakes, from discharging their responsibilities and denying legitimate claimants their cap payments. Instead the actual repair costs beyond that ended up being paid by tax payers because the EQC/Fletchers dud repairs, let the insurers off the hook. Surprisingly the sixth Labour government didn’t bother to quantify what a stupendous own goal Key & Brownlie had scored.
Yes, because then Stephen would be on here berating Labour for spending hundreds of millions of dollars or more buying the asset from the consortium of private oil companies.
Because really, what is the bottom dollar they'll take? Any negotiations will be a net economic benefit to private enterprise, and a net economic loss to the taxpayer. They'll treat the taxpayer like a blank cheque book.
For those really interested in economic resilience issues, here's a reminder of a story I did in 2023, which includes details of fuel security policy settings and food security, plus details of a report by David Skilling for the now disestablished Productivity Commission.
Shane Jones made an announcement last year about increasing fuel reserves; https://www.beehive.govt.nz/release/stronger-fuel-reserves-drive-economic-stability
I’m by no means an expert, but wouldn’t the cheapest way to create fuel security be stockpiling fuel, rather than spending billions on a refinery? It would also help if we had a good plan to reduce fossil fuel use, maybe some kind of clean car discount or something.
Not an expert here, but I understand that storing a bunch of crude oil is easier/lasts longer than creating individual stockpiles of the various refinery products. Maybe added flexibility as well, but I'm not certain of that.
I'm also not in a position to judge the cost/benefit of each approach.
Hope this vague anecdote helps. And I agree, getting off the stuff would be the obvious path for reducing our vulnerability to imported oil and oil products.
Yeah, petrol and diesel both go off (lose their volatility) and while you can put stabilisers into them, in the quanitites we're talking about here that is an activity fraught with risk.
And yes again, BEVs and bicycles don't rely on fresh petrol/diesel to kep going. At the very least, more BEVs means we need to carry less reserves of unrefined oil.
It's a definite option that should be explored, but if we have not developed the 'rules' associated with such zones - wouldn't it be premature to re-zone it as such?
I just think we need to clearly examine the concept - set some ground rules (e.g., for example the business case needs to exhibit x, y, z criteria) about how the country wants to design these from a policy outcome perspective.
But, great idea. It fits in with the broad ideals of localism.
@JimboJones No. And this is where you have to have a policy conversation first. For example, one of the criteria for determining a suitable location - might be that its current use is no longer viable; remediation of the site for a change in zoning (from industrial to residential) would not be viable either; that sort of thing.
As the overseas experience shows, only 40% of these examples elsewhere remain long-term viable once the special zones have been determined. The article suggests that this site has some definite positive qualities (i.e., near a deep water port).
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