Refining NZ is now pushing on with plans to become an import-only terminal, after reaching a deal with Z Energy.
Marsden Point oil refinery Photo: 123rf.com
The company, which operates the Marsden Point refinery south of Whangārei, has been reviewing its operations since early last year, as its profits had been squeezed by a slump in refining margins and an oversupply of fuel products in the region. [
Its deal with Z Energy, which would apply to all its customers, would create an supply contract for 10 years, provide third-party access to the refinery's Auckland pipeline and would generate about $95 million a year from a combination of fixed and variable fees.
Refining NZ independent chair Simon Allen said the agreement was a significant milestone for the company.
"The import terminal operation would utilise our highly strategic infrastructure to receive, store and distribute transport fuels primarily to the Northland and Auckland markets safely, reliably, and efficiently."
He said long-term agreements would stabilise the company's revenue, compared with the inherent volatility in revenue that came from refining.
Z Energy chief executive Mike Bennetts said transitioning Refining NZ's operations to an import terminal was the right decision.
"The refinery can now move forward with its conversion plans and preparation for obtaining approvals, while Z can progress towards its preferred operating model of exiting the crude supply chain," he said.
Refining NZ had already reached a similar agreement with its third largest shareholder, BP, in February, and would now prepare for a shareholder vote to end refining at Marsden Point later this year.
It would also request lender consents to fund the conversion and would continue to seek a commercial agreement with its largest shareholder, Mobil.
In October, Refining NZ announced it would reduce production and cut 100 jobs to save about $200m in operating costs.