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.
44 Comments
Great to see the government starts to understand Deng Xiao Ping's famous saying:
无论是黑猫还是白毛，抓到老鼠就是好猫。
"No matter the cat is black or white, it's a good cat if it can catch mice."
...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.
The Labour party didn't close the refinery, and I don't recall National or ACT pushing them to interfere in the decisions of a private company at the time (happy to be proven wrong on that if it's slipped my memory).
Private company decision, are you saying it should have been nationalised? At least the coalition will get us a better ferry deal ..oh wait? (Treason)
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...
It wasnt 'sold'...they were paid to take it, around 85 million in 1988 dollars...plus the gov absorbed over a billion in debt.
One has to wonder about the business nous of Treasury.
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.
It was maybe the deal of the decade, but there was a lot of competition for that title in the late 1980s and early 1990s. Only Boris Yeltsin's Russia could outdo us on privatisation ineptitude. A lot of intergenerational private wealth was created. Heaven forbid we tax some of it back.
Do you wish Labour were more socialist and nationalised the refinery?
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.
In news from the year 2040:
"Marsden Point sinks into the sea as a result of a combination of sea level rise and nil effort made to stop erosion caused by unfettered development in a small area."
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
A special economic zone sounds worryingly like a rules-free zone. The capitalist version of Guantanamo.
https://en.wikipedia.org/wiki/Special_economic_zone
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.
How long do we need it for? Again not an expert but I’ve got fuel in my shed for my lawnmower that’s over a year old, still fine.
Forever.
Once curtailed, imported FF is unlikely to come again. We are beginning to see the posturings for WW3, and like WW2, it will be over the remaining resources - particularly oil. Indeed, for the last 30 years, the curtain-raisers have been exactly that.
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.
You want the government to pick where businesses should invest, purely based on “because that’s my electorate” ?
Do we have any maths that establishes the cost on a small town if a plant shuts down shop?
And then there is the additional cost of clearing the site and making it ready/viable for an alternate use.
@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).
Kate - so do gated communities.
And the parallel holds.
This is the illogical end-game of privatisation of the commons - including the ownership of get-out-of-regulatory-jail cards.
But don't fret - it won't happen, the great reset is underway.
Do you mean that gated communities also fit the ideals of localism?
No, I mean you're missing the threat
So you think re-purposing the site for some kind of energy production facility is a waste of time? Sure as certain, the FFs are in end game, but doesn't that make renewables or any and every sort worth pursuing. Some folks might have to live through whatever that end game turns out to be.
Kate,
You are wasting your time. As with all prophets throughout the ages, PDK is armored in the infallibility of his predictions. He admits of no possibility of error. Of course we do not have unlimited natural resources, but that need not mean that global calamity in the near future is certain. For a start, our reserves of fossil fuels are by no means close to exhaustion and the importance of that is to give us longer to deal with the issue. many potential scenarios exist. One is that PDK's doom-laden prophesies will eventuate and global chaos will ensue with the population being decimated in the process. He believes that earth's true carrying capacity is under 2 billion. In the words of Hobbes, 'life will be nasty, brutish and short'.
I believe that other possibilities exist. The transition to a much lower carbon society will happen though with very considerable societal upheaval in the process. As Mike Joy might put it, we will gradually learn to do less with less. Another possibility is that all the effort being put into fusion will begin to payoff over say, the next 40/50 years, while many more small-scale fission reactors come onstream.
I’m a business. Can I be a SEZ and pay less tax with less regs? Please…
You have to take shane jones for a dinner he forgets to put in his diary.
How long would the SEZ be in force, 99 years?
A positive initiative for a change
A positive initiative for a change
Really? If less tax and regulation are good for some why are they not good for all?
Smells like a fossil fuel subsidy
It's a good idea but he will need to make sure that commercial land is cheap and available. I would like to buy some there and it's expensive and there is little of it. Two of the most important things for a productive economy are power and inexpensive land. Fix these and we might have a chance. The councils have crushed the economy through land restrictions. There will be no economic revival until we have somewhere to live and conduct business cost effectively without being involved with the banking sector which is far too large with the country struggling to support it.
Park one of these babies off Marsden and start producing our own hydrocarbons, desal, uranium, ammonia etc from seawater. Cut out those evil big oil middle men.
*this comment was paid for by Big Oil.
https://newatlas.com/energy/core-power-plans-mass-produce-floating-nucl…
"Sustainable hydrocarbon fuels by recycling CO2 and H2O with renewable or nuclear energy
An analysis of the energy balance and economics of this CO2 recycling process is presented. We estimate that the full system can feasibly operate at 70% electricity-to-liquid fuel efficiency (higher heating value basis) and the price of electricity needed to produce synthetic gasoline at U.S.D$ 2/gal ($ 0.53/L) is 2–3 U.S. cents/kWh. For $ 3/gal ($ 0.78/L) gasoline, electricity at 4–5 cents/kWh is needed. In some regions that have inexpensive renewable electricity, such as Iceland, fuel production may already be economical."
https://www.sciencedirect.com/science/article/abs/pii/S1364032110001942
Marsden Point is vital, but it was historically badly managed and should never have passed completely to private ownership as it's a strategic asset.
Marsden was originally partly built and then extended by public money, and in 1988 the refinery had to be underwritten by public money (again) after the ramshackle upgrade project that was a legacy of think big colliding with apparently endless industrial disputes.
The refinery was eventually essentially handed to refining NZ - a private consortium of oil companies.
That creates a real tension between the need to manage the national risk of our petroleum energy and product supply, which we are going to be reliant upon until there are meaningful alternatives, and the oil companies primary task of making money.
The moves on change of ownership of Northport (Marsden Point) announced yesterday seem well timed in light of this announcement from Shane. A container terminal within a free trade zone could be a valuable asset
Rail is planned. Makes sense but wouldn't want to be in the Marsden Waterways development as commercial activity expands.
In 2023 some 90% of new cars were ev's in Norway
If that were true of New Zealand the savings of fuel and overseas exchange would be large.
So large that there would be a need for shane jones
But Luxon clearly doesn't want EV's and has predictably screwed up again.
Among other things we don't have the charger network to make wider EV uptake more viable, and we don't have anything like the good public transport systems that underpin it by providing for longer distance travel, either.
The infrastructure investment needed here is massive, and we don't have Norway's petrochemical sovereign funds that have been used to develop their country's infrastructure - and that's the fault of our governments of all stripes.
Just got the email to confirm power price increases from 1/4/2025 and 30c more for daily line charge due to the continued phasing out of the low energy plans by govt. Estimated cost increase per month $14. Once again, solar will keep getting a better ROI as the years go by. A relative in the energy business confirmed Tiwai have agreed to stop another smelter pot at the plant to 'help' the national demand coming into winter with low rainfall at milford sound this summer. They will sell the alotted power for this pot back to the grid at an inflated price to which they purchased it, effectively profiteering from our national supply shortfall. This can happen with other industries with commercial contracts. When will we demand a split of gentailers to retail and generators individually to increase incentive to develop generation to meet our ever growing electricity needs? Many cannot have fires anymore and nee heat pumps, many are purchasing hybrid and EV vehicles adding demand. More houses being build, more immigration, more demand.
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