The bug watch starts here...

AS THE clocks strike midnight on 31 December in New Zealand, the world's biggest oil companies will be anxiously watching events at a small refinery near the tip of the country's North Island.

The refinery at Marsden Point, near Whangarei, is the closest in the world to the International Dateline and so, as 1999 rolls over into 2000, it will become the first place to be affected by the millennium bug if its computers suddenly crash.

It is not just the Antipodean oil business that will attract international attention on New Year's Eve; in banks, hospitals and power stations, and in every sector of industry around the globe, Down Under will be scrutinised for early warnings of possible problems. For if the bug bites, it will bite first in New Zealand and Australia, the world's most easterly industrialised nations.

The two countries are among the best prepared to deal with the advent of 2000, having invested billions of pounds on upgrading computer systems and carrying out remedial work.

Unlike Europe and the Americas, they will not have the luxury of observing events further east and thereby drawing lessons many hours before midnight strikes locally. Nor do they relish the prospect of undergoing economic meltdown under the gaze of the rest of the world.

Australia has spent a total of pounds 4.8bn on a joint government and industry programme, the equivalent of pounds 260 per head of population, which is more per capita than the United States. On the night, the government will be working closely with Emergency Management Australia (EMA), a federal agency that co-ordinates response to national disasters. The EMA will be on stand- by to marshal Hercules military aircraft to fly personnel and equipment to anywhere in Australia.

The Y2K bug is a glitch that was inadvertently programmed into older computers, which only recognise years by the final two figures and so could misread 2000 as 1900. For the past three years, software engineers in Australia have been carrying out the laborious task of conducting date change tests on crucial systems with computer chips in them - such as pipelines, lifts and air-conditioning - and fixing or replacing them where necessary.

"It's like searching for 10,000 needles in a huge haystack," said Senator Ian Campbell, who, as parliamentary secretary to the minister for communications and information technology, is the politician responsible for making Australia bug-proof. "For major infrastructure, banks, transport, electricity and tele- communications, it will be business as usual. I hope I'm right, because everyone will be watching us."

That last is no idle boast. The government set up a website (www.y2kaustralia.gov.au) five days ago to collate and convey information from around the country on New Year's Eve. It has already received a quarter of a million hits, 60 per cent of them from overseas, and 10 per cent of them from the American state of Virginia: not unconnected, presumably, with Washington DC.

Among the international visitors who will be in Australia next weekend will be a team of British civil servants and, reportedly, Bill Gates, the chairman of Microsoft, who made his fortune from computers and is now the world's richest man. Mr Gates will welcome in the new millennium from aboard the yacht of his friend, Kerry Packer, the Australian media mogul, in Sydney Harbour.

Some organisations are taking no chances. In New Zealand, which is two hours ahead of the eastern states of Australia, the Auckland port authority has banned ship arrivals during the transition period. Ansett and Qantas, the two Australian airlines, have grounded all domestic flights over the period, although Qantas will have 13 international flights in the air when the new millennium dawns.

In Sydney Harbour, a string of barges from which a huge fireworks display will be let off will all be equipped with back-up generators. But the million-plus people expected to line the foreshore to watch the fireworks will not be able to get home for more than an hour; underground stations will be closed for 90 minutes from 11.45pm because of the risk of a power failure. In Wellington, the New Zealand capital, traders are planning to guard their own stores on New Year's Eve, fearing an outbreak of looting if the bug hits. The government has set up a National Incident Monitoring Centre, which will operate from a bunker at Parliament Buildings.

British companies, meanwhile, have spent more than pounds 2.4bn preparing for the bug and the majority are confident their computer systems will be working on Saturday morning.

A survey conducted by Continental Research on companies with a turnover of pounds 1m or more has found that more than 80 per cent of them are "completely"' or "very confident" that all the systems that they rely upon for their businesses are Y2K compliant.

The larger the companies are, the more confident they become, with 88 per cent of businesses with a turnover of more than pounds 5m being confident that they'll still be in business after the millennium weekend.

Taskforce 2000, the government-sponsored body overseeing preparations for the Y2K bug, has been sending out increasingly confident signals in recent moths. Its latest report gives all of British industry a clean bill of health with the only question marks being over local government and police systems.