Ministry talking to petrol firms about Russian sanctions gap

Tuesday, 25 November 2025

Rather than being a loophole, the rule allowing Russian crude to be refined in countries such as India and then imported into NZ was written into guidance provided to importers by Mfat.

The Government is reviewing a gaping hole in the country’s Russian sanctions policy that means motorists risk unwittingly financing the war on Ukraine when they fill up cars with petrol or diesel.

Australian-owned Z Energy imported three tanker loads of petroleum products worth about $100 million between December 2024 and April 2025 from India’s giant Jamnagar oil refinery, which is a known major processor of Russian crude.

The Helsinki-based Centre for Research on Energy and Clean Air (Crea) estimates up to 55% of the crude oil processed at the refinery was derived from Russian oil at times this year.

Although New Zealand notionally sanctions “directly or indirectly” importing oil and gas products originating from Russia, a less well-known guidance note issued by the Ministry of Foreign Affairs and Trade (MFAT) in October 2022 means the ban doesn’t apply if they are first refined into products such as diesel, petrol and aviation fuel outside of Russia.

It is not a loophole. The guidance states that Russian crude oil that has been processed in a third country into refined oil “will be regarded as having the origin of the country undertaking the refining, for import purposes”.

New Zealand stopped importing crude oil and switched to only importing fuels in their refined form when the Marsden Point oil refinery closed in March 2022, meaning any fuel imported since then could potentially have been produced — entirely legally — from Russian crude.

A spokesperson for Mfat did not explicitly say whether it felt the guidance it issued in 2022 was appropriate, but said it would “continue to monitor closely developments regarding sanctions on the Russian energy sector”.

It has subsequently been confirmed to The Post that a review is taking place.

Close attention was being paid to the issue and engagement with New Zealand’s oil importers was under way, the spokesperson said.

It is understood officials have been working with the UK to consider how gaps in the sanctions regime could be closed.

Mfat’s guidance means there is no restriction on petrol companies sourcing deriving fuel from Russia crude, so long as the refining didn’t happen in Russia.

Australian petrol companies, including Z-owner Ampol, have also faced questions in Australia over their purchases of refined Russian petroleum products.

The Sydney Morning Herald last week reported claims they had imported A$3.8 billion (NZ$4.2 billion) worth of refined Russian oil products since February 2023 but that the owner of the Jamnagar refinery, Reliance Industries, had promised to stop exporting fuel derived from Russian crude from Monday next week.

It reported analysts had questioned how Reliance’ pledge could be monitored, given it had not promised the same in relation to the fuels the refinery supplies to the domestic Indian market.

Z Energy said in a statement that it was “deeply committed to complying with all applicable laws and sanctions in New Zealand”.