A gas distributor has put some prices up by nearly 600 percent, because of the Kapuni CO2 plant shutdown, according to a letter sent to customers.
Photo: 123rf
The Todd Energy plant, the country's only domestic producer of food-grade CO2 since the Marsden Point closure last year, has been shut for three weeks for safety reasons.
BOC bottles the gas and uses it to make dry ice, then sells the products to customers ranging from hospitals to food and beverage producers.
A 10 January letter from BOC to clients, shown to RNZ, cited "significant challenges in the supply of carbon dioxide, following an unforeseen and ongoing interruption to supply at our third-party source in Kapuni".
This said the situation was "beyond BOC's reasonably control and accordingly, BOC's supply obligations are suspended during this period".
The letter said there had been "limited availability of compressed carbon dioxide and dry ice for our customers since 22 December 2022, as we preserve supply for medical, safety and water customers".
BOC said it was extending an import model for carbon dioxide products, but there was a "significant cost" to bring in products from overseas.
"We will also likely need to ration product to customers below normal volumes."
The new prices will begin from 16 January, for three months, and will then be reviewed.
Some bottles are going up from $37 each to $216.
Others from $31 to $117.
The letter said: "Where practicable, BOC is recommending that customers consider alternative gases and processes to reduce reliance on carbon dioxide during this challenging time."
Customers were asked to complete a form showing they accepted the new prices "otherwise, BOC will suspend supply of carbon dioxide to your facility".
BOC acknowledged the commercial impact for customers and said the company was committed to keeping them informed in the "evolving situation".
In a subsequent statement to RNZ, BOC said it was "working closely with its global supply chain to secure more CO2 supplies".
"Importing additional product comes at a significant cost factoring in production, storage and shipping fees."
The company said it had "already invested significant resources and capital to establish an import supply chain since the closure of the Marsden Point refinery".
"Unfortunately, we are unable to absorb the significant costs associated with importing additional CO2 and therefore notified customers of a pricing adjustment across all CO2 products this week."
It also said: "Rationing remains in place and allocations are being reviewed regularly in line with product availability."
Todd Energy said its own CO2 pricing to distributors had not changed, only the supply.
The oil and gas company said it didn't set CO2 market pricing - that was soley at the discretion of distributors.
The safety problem that cause the shutdown was discovered during normal operating surveillance, it said.
The company also said that because liquid CO2 was a byproduct of natural gas production, there were no employment impacts for plant staff, and during the shutdown, they were working at other sites in the network.
There is no date set yet for a reopening at Kapuni.
Brewers' concerned job losses and closures, imminent
Brewers Guild executive director Melanie Kees told RNZ many members got the letter from BOC this week, and did not know how they would afford the gas now.
"A lot of the breweries in New Zealand are small businesses, so to have a price increase of that much, potentially will cripple some of these businesses. They can't pass these costs on always," Kees said.
Brewers Guild executive director Melanie Kees. Photo: Supplied
"It may mean, both with the shortage and the price increase, that they either pause production of beer, simply because they cannot access the CO2 that they need, or, in some cases, they may actually shut up shop.
"There have been people [brewers] talking about if they can't continue to produce, that staff hours will be reduced."
There were "knock-on effects" from that, Kees said.
"The stress and the mental health toll that will be taken by some of these business owners, but also, potentially, there could be job losses," she said.
"And of course, the wider effect to the food and beverage and hospitality industry is that if beer isn't being produced - and remember of course they need CO2 to pour beer at bars - they too are going to notice a really huge impact from this."
That could also mean fewer hops and less malt would be bought from suppliers, Kees said.
"The supply chain involves key companies. There are all sorts of different businesses that are going to be affected by the shortage."