Refining New Zealand has slashed its half year loss as it moves towards ending processing and becoming an import facility.
Refining NZ at Marsden Point. Photo: RNZ
Key numbers for the six months ended June vs the previous year are:
- Net loss $4.9m vs $186.4m (included $158m asset writedown)
- Revenue $115.4m vs $119.1m
- Adjusted earnings $34.5m vs $20.5m (excludes one-offs)
- No dividend
The operator of the Marsden Point oil refinery has reported a markedly lower half year loss, as it slimmed down operation reduced costs and broke even with the help of subsidies of its major customers.
Refining New Zealand is moving from being a fuel processor to an import facility after shareholders overwhelmingly voted earlier this month to end 60 years of making fuel.
Chief executive Naomi James said the company had managed to operate the refinery safely through an extended period of low margins, supported by guaranteed prices from its major customers, while not losing cash or destroying shareholder value.
The refinery had used the period to set up the transition to a fuel import facility, she said.
"We don't expect a change from refinery to import terminal will involve much change for New Zealanders as we already import a large portion of New Zealand's fuel needs."
The amount of crude processed fell about 16 percent to 13 million barrels, while the amount of jet fuel produced was also lower because of reduced demand reflecting closed borders. The company has stopped making bitumen, used in road making.
Its margins improved but it still needed $29m in fee floor payments from the three major oil companies - Z Energy, BP, and Mobil - using the refinery. The payment guarantees a minimum processing fee if margins fall below a certain level.
"Very little has changed in the broader environment in which we operate. Refining margins continue to be weak and excess refining capacity in the Asia Pacific region remains," James said.
A final decision on the transition to import terminal would be made in the coming month as agreements with the three oil companies are finalised, with the transition expected to occur next year, she said.