Refining New Zealand has posted a loss of more than half a billion dollars as it wrote down the value of the Marsden Point refinery ahead of its conversion to a fuel import only terminal.
Marsden Point oil refinery Photo: 123rf.com
Key numbers for the year ended December (compared to the previous year):
- Net loss after tax - $552.6m vs $198.3m
- Revenue - $234.1m vs $245.7m
- Write down refinery and conversion cost - $567m
- No dividend
The financial accounts were something of an obituary for the refinery, which is about to end refining of crude oil and production a range of fuels, and become a large storage facility.
For a second year its income was underpinned by guaranteed subsidies known as fee floor payments from the major fuel retail customers - Z Energy, Mobil, and BP - because refining margins have been too low.
Chief executive Naomi James said demand for petrol and diesel had rebounded outside of lockdowns, but aviation fuel demand was less than a third of pre-Covid levels.
"We successfully transitioned to a simplified refinery to enable us to maintain cash neutral operations at the fee-floor."
The refinery will start winding down production in March and become a giant storage facility for imported processed fuel brought in by the fuel companies.
"The conversion to import terminal operations is a fundamental reset of our business and is expected to lead to significantly more stable earnings, a return to dividends for our shareholders and ... will position the company to actively participate in decarbonising of the New Zealand energy market," James said.
The $567m writedown in the value of the assets included $176m in restructuring costs, such as demolition of the refinery, which is expected to be 10 years away.
The refinery's closure will see the loss of more than 200 jobs over the next two years.
As the refinery closes the company will change its name to Channel Infrastructure NZ, with storage for 180m litres of fuel, and management of the private storage of a further 100m litres, as well as fuel testing, and operation of the 170km pipeline to Auckland.