Refining New Zealand has confirmed it will become an import-only terminal from April next year, after securing long-term supply agreements with its key customers.
Tanker unloading at Marsden Point Oil Refinery in 2013 Photo: Rafael Ben-Ari/Chameleons Eye/ 123RF
The company said following the new contracts with BP, Mobil and Z Energy, the board had now made its final investment decision to transition the Marsden Point site to importing and storing refined fuels.
The company would rename itself Channel Infrastructure New Zealand in the process.
The closure of the refinery follows a substantial decline in refining margins in the Asia region.
"Today is a momentous day in the journey to transition our business from operating as a refinery to an import-only fuel terminal," chief executive Naomi James said.
"After 60-years of operations as New Zealand's only oil refinery, we look back on the past with pride and look to the future with confidence that our business will continue to contribute to our community, and New Zealand, long into the future."
The conversion was forecast to cost between $200 million and $220m over the next five to six years, with up to $60m spent on demolition.
Fees for fuel storage would generate $95m per annum, it said.
It also said it had the entered into long-term contracts with customers to provide dedicated private storage, with further agreements expected to be announced in the future.
James said a key focus for her now was supporting people whose jobs would be in jeopardy, as operations at Marsden Point were scaled down.
It currently employed 300 staff but the number was expected to reduce to about 70 in the next two years.
"I am committed to supporting them through this time to find new employment or training opportunities, to be ready to transition to new roles once the refinery is safely shutdown," she said.
This included liaising with other companies in the region, as well as across New Zealand and Australia, which may need the skills Refining New Zealand's workers had, she said.
Z Energy chief executive Mike Bennetts said importing refined fuels was the best choice for New Zealand, as refining margins had been volatile over recent years.
"Moving to a refined product fuel supply chain will improve flexibility and resilience of the supply chain and improve the industry's ability to respond to changes in the domestic market.
"The move to an import terminal will release approximately $150m in working capital that Z has tied up in crude oil
product for the benefit of shareholders and our investment in a low carbon future."