The fate of the Marsden Point oil refinery could be sealed today when company shareholders vote on a plan to close down the refining operation.
Marsden Point oil refinery Photo: 123rf.com
They are being asked to approve a proposal to convert the site into a fuel import terminal, which will result in job losses, although the company said it was the best option to allow it to remain viable.
Refining NZ chief executive Naomi James said: "We need to make a change in the way we're operating because of the most difficult circumstances we've faced in 60 years".
Shrinking refining margins, an inability to compete with offshore refineries which can operate at lower costs and the drive towards low carbon transport fuels are the reasons cited by the company for the major shift.
"We're necessarily conscious of New Zealand's focus in particular on reducing carbon emissions, with the emergence of new challenges and opportunities expected in the transition to low carbon transport fuels over time," James said.
The decision will mean all of New Zealand's fuel products will be imported having already being processed by refineries in Asia, and Marsden Point will operate as an import-only terminal, under the banner Channel Infrastructure.
"There will be a change of the amount of stock that's held in New Zealand, because we will no longer have had the crude here at Marsden Point, and that's one of the things that the government has obtained advice on and and has looked at as part of their consideration," James said.
A spokesperson for the Ministry of Business, Innovation and Employment (MBIE) said it was preparing advice for the energy minister on the implications of the decision, although the advice it had received suggested the move to an import terminal was not a major risk to fuel security.
One option would be to require fuel companies to hold a minimum level of oil reserves.
"There is not a strong economic case to hold onshore reserve stocks beyond the current stock level, but there may be other reasons to consider this, for example the management of international supply chain risks," the MBIE statement said.
Voting on the proposal will take place at a meeting in Auckland, with a result expected later on Friday.
However, the final investment decision on the transition will be made by the company's board later this year.