The company that owns New Zealand's only oil refinery, at Marsden Point in Northland, looks as though it is favouring and moving ahead with a previously signalled option to quit the refining business and become merely a fuel importer.
Refining NZ provided NZX on Thursday with a jargon-heavy and obtusely-worded "update" on its strategic review announced on April 15 this year.
Reading heavily between the lines it seems clear that the company's intention at this point is to press ahead with a plan to convert the refinery to an import terminal.
The statement also appears to indicate the company will focus on supplying fuel into the Auckland and Northland markets.
It also refers to now developing plans to "simplify refinery operations and structurally reduce operating costs". It doesn't give any specifics on what that entails.
Fuel company Z Energy, which is both a shareholder in and customer of Refining NZ said in its own statement to the NZX that Refining NZ was "moving in the right direction".
Z's chief executive Mike Bennetts said Z had made it clear to the board of Refining NZ, to Z shareholders and to its customers, "that we believe moving to an import terminal model is the best outcome for the refinery and New Zealand".
Refining NZ says it "will continue to evaluate a possible future staged transition to an import terminal, including exploration of a commercial framework with customers, overseen by the Independent Directors".
"This process will include consideration of the optimal timing of any conversion, the sequencing of supply chain changes, the scale of costs related to an import terminal conversion program, and the range of commercial terms for terminal and pipeline operations," the statement says.
The funding requirements for any conversion would depend on "the exact configuration of any terminal conversion, its commercial framework and timing".
Shareholder approval would be required.
A further update on the review is to be provided by the company by the end of the September quarter this year.
The company's chairman Simon Allen said Refining NZ was "committed to delivering a strategic outcome which delivers sustainable returns for our shareholders over the longer-term".
"At the same time, we are conscious of the significance of the options under consideration and the potential impacts on our people and the local community.
"We will continue to work closely with all stakeholders to ensure the right decisions are made and implemented in a planned and co-ordinated way to ensure the safe, reliable supply of quality fuels to New Zealand now and into a lower carbon future, while managing the impact of changes on our people and the local community," he said.
51 Comments
That's the issue with raking off profits and failing to keep up the technology updates and maintenance. Once again NZ companies entrenching our dependence on very long logistic lines. If the current state of geo-politics continues it's current direction, we'd all better won bicycles! And before the nay sayers rise, COVID should have taught us anything can happen! Importing crude would be a lot safer than importing refined products, AND we cut out a middleman. A refining capability should be viewed as an essential national asset.
You say your friend works there frazz, how many employees may people may lose their jobs. I was born, raised and worked in Whangarei. When the refinery was built, locals thought here we go, big industrial expansion to support the refinery was about to go ballistic. Unfortunately, it never happened and a lot of people left the area. I now live in the Bay of Plenty.
You could be right, but with electric vehicles gaining in scale it becomes a difficult equation on where and how much to invest in the future. It could be a long payback period.
Just hope the government doesnt get conned into aid, where the better investment would be growing the countries electrical fleet. This country has huge green generation potential, and the less we import the better. Oil markets are too volatile to further invest in this field, which is constantly been manipulated by big players.
Self sufficiency is the name of the game, and always has been. All NZ inc needs to maintain is a controlling interest, and internalise finance; so we dont get screwed over by offshore interest; like Muldoon was.
Fossil fuels may always have presence, however rather than subsidise the oil cartel, NZ inc would be better to put the subsidy to investment in electric propulsion.
The biggest difference between oil and electricity is NZ can supply all its electricity needs, and use of your own natural resources is way better than having to rely on someone else. (no US$ needed). Even better you are removing yourself from a cartel, who cares only for profit maximisation at the expense of everything else.
Excuse me but when you say we can supply all our electricity needs can you define how we do that and convert our entire transport fleet to electricity to replace oil? We would need to more than double our existing generation capacity to do that. Do you think we can do that with wind farms?? Good luck with that one.
Really? Tell me how to replace 300 Petajoules a year of energy with new electricity generation? Wind power would need 30,000 megawatts of new generation. We currently have around 700. At around a $1m per megawatt of wind generation that’s $30b of investment. Pluck that out of thin air if you please. Vehicle to grid is about storage of variable renewable energy not the generation itself. And even if you did build 30 gigs of new wind generation I would be pretty surprised if the nz vehicle fleet would be big enough to store it. And if if we had a really windless period for a week or two?
Given that " Crude is delivered from around the world to the Marsden Point jetty predominately from the Middle East and South East Asia." does it make much difference to our energy petrochemical needs?
If we were refining 'our own stuff' that's different. But we don't appear to be?
I don't like to brag .. but .. TOLD YOU SO !!
A total turkey of a company. Yes I did own stock in NZ Refining. I sold it months back and realised the loss.
I feel sorry for people still holding on now that it's 60% plus down.
Let this be a lesson to people .. sometimes 'the dip' doesn't go back up. I redeployed my capital and probably am suffering a net zero loss - thankfully!
Hmmm loose fuel independence, or expansion for future Auckland port facilities. Looking forward I would take the port relocation project as it has more long term benefits.
While electric is coming I cant see our fleet converting in the near term, so we need a plan to address that. The smelter is making very high quality aluminum. Perhaps we should be funding research into Aluminum battery's (https://www.chemistryworld.com/news/super-fast-charging-aluminium-batte…), that can be manufactured in NZ for domestic and export use. Combine with some sort of conversion set for popular cars already in use and you have a plan.
Average age of car in nz is 14 years. Suggesting 20-30 years to replace our fleet with electric.
It absolutely makes sense to gradually wind down Marsden Refinery in face of switch to electric (that will soon kick into high gear as EV's will undercut petrol vehicles in all market segments within about 5 years). New investment in refining will never be recovered
Forward, bigger picture objective thinking here.
Vehicles should be more expensive here, but they are not because the oil lobbyists have encouraged cheap imports because its good for their business not NZ inc.
These cheap imports, which push the average age of a car out, have made:
- public transport alternatives uneconomic,
- congested our roads, and
- been responsible for alot of premature deaths of our youth (and the expense that goes with it).
If government are smart, and work for the interests of NZ inc, we could replace the fleet to electric in less than 20 years. If I was running the country, I'd make it happen.
As above Wazim. You do the maths and tell me what I’m missing. Always ready to be educated so come up with an answer that actually says something. Given you don’t know the difference between storage and generation maybe you’re the one unqualified to comment on the subject.
Cindy and Billy Bunter -Robertson will soon realize this is not the University Students Union Bank account that they are running ........... when you start taking over all manner of businesses using debt and without the skills to run them , you are going getting into a very deep hole
The Aussies have been mothballing refineries for years. Many kiwi travellers will have noted the huge refineries in Asia and long ago figured out refining is a scale play. Tough nut Naomi James is just the going through the motions hatchet wielder, what needs to happen has been obvious for some time. It'll still be a tidy little distribution business.
committed to delivering a strategic outcome which delivers sustainable returns for our shareholders over the longer-term".
That's the divergence - our shareholders vs all New Zealanders.
We will eventually be without fossil energy. But in the morph, geopolitical upheavals will compromise the ability to obtain supplies (of anything). Whether it's worth having the refining capacity is a political decision, but the current crop of 'pollies' probably don't know enough (although they should: https://www.parliament.nz/en/pb/research-papers/document/00PLEco10041/t… )
Wood-alcohol and biodiesel are the two I'd foster, how/where we produce them is an interesting question; who owns and what is the current state of Motunui? Is it still Methanex?
More blood on the floor of the energy sector .
These highly skilled , highly paid engineers and specialists will be welcomed as taxpayers in Aussie .
New Plymouth already has empty retail stores to let with the banning on new gas exploration , its only going to get worse
It depends whether their knowledge was future-relevant.
If not, they're like blacksmiths were in the '30's.
What you mistake, is what constitutes wealth. I'll give you the tip; it's not depleting resources, despoiling the planet and having more digital proxy (anticipation of puture purchase). We are heading into a new paradigm, or series thereof. Many 'givens' - the worst being 'endless economic growth'- are now being shown up to be false gods. Energy is the key element (it is the 100% underwrite of everything) so this is a valid discussion - but not bemoaning 'jobs' in the short term, based on one-off extraction(s). The new model will be very different (whether we go there willingly of because the system, or the planet, falls over).
Remember why the Refinery was initially expanded????....because of unstable world events that threatened the countrys' fuel supply resulting in the much hated Carless Days scheme.....but of course now that the world is really stable.......this is gonna bite NZ in the ass........
There were 4 billion on the planet in 1980. Near 8 billion now. And a large percentage want to live like the few at the front end. But even with only a few overconsuming, the planet is on it's knees.
So stable? I assume you jest? It's as unstable as it's ever been and getting more so daily. Can only happen once globally.
The government has given special powers the commerce commission to poke its nose into the fuel companies business in an attempt to find out how much money they are really making. The fuel companies are the NZ Refining majority shareholders. This is NZ refinings way to push back on the government and threaten 400 + well-paying jobs in Northland as well as a negative effect on the wider Northland economy during a pandemic recovery period. It is about timing. Next will come to the ask. Just like Tiwai point. At the very least it will be "Bugger off out of our business, our profits are ours to decide. We price what the market can stand". Or "we need a subsidy of some sort to retain
X number of staff and keep the refinery operating". I say Let them go to an import-only model. But make them allow other companies tankers (like Gull) to use the Marsden terminal,Wiri pipeline and Wiri storage facility at true operating cost.
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