Refining NZ foreshadows 240 job losses through Marsden Point restructure

Business

Shareholders in NZ's only oil refinery will vote next month on plans to turn it into an import-only facility by the middle of next year; the move's expected to cost in excess of $350 million

5th Jul 21, 12:12pm by David Hargreaves

Refining NZ has named the date for a shareholders meeting that will vote on a proposal to turn the country's only oil refinery at Marsden Point into an import-only facility.

If shareholders approve the move at the August 6 meeting in Auckland, Refining NZ will press ahead with plans to switch to an import-only model by the middle of next year. And it will change its name to Channel Infrastructure NZ.

A 160-page explanatory booklet released for the proposal says the current Refining NZ workforce of 300 is expected to reduce over the two years following commencement of import terminal operations to approximately 60.

"During this transition period, there will be an ongoing requirement for a workforce to support the shutdown and decommissioning of the refinery site, execution of the capital projects and other transition related activities. Workforce planning remains subject to employee consultation," the booklet says.

It makes no mention, however of contractors, of which there have been large numbers too.

The company has been moving towards this point since announcing a strategic review over a year ago.

The strategic review was prompted by a significant decline in refining margins as a result of excess refining capacity in the Asian region.

Refining NZ says the move to end refining will likely cost about $200-$220 million over five to six years, while demolition of the refining facilities will cost a further $50-$60 million and up to $60 million in additional capital investment may be required to convert tanks for private storage services.

The company's expecting to generate tax losses of $300-$350 million that will be potentially usable against future profits.

The new storage-only facility will accommodate 180 million litres of fuel, with a potential extra 100 million litres of private storage for customers.

The explanatory booklet says following the refinery closure, the Marsden Point site is "well situated for future opportunities".

"With a deep-water harbour (approximately 14 metre draught), proximity to the large Auckland market and a strong infrastructure footprint, the site is well placed for repurposing as a fuels and energy hub. Refinery assets will be assessed for their future potential use and may be mothballed rather than decommissioned, based on this assessment, and subject to risk mitigation controls."

The announcement of the shareholders meeting date follows Refining NZ reaching non-binding in principle agreement with bp and Z Energy on "key commercial terms". Negotiations are still under way with Mobil, however.

Refining NZ chief executive Naomi James said while the move to end refining was "not a significant change for most New Zealanders", a conversion to import terminal operations was a significant change for our operations and "for everyone at our Marsden Point site".

"A key focus for us over the coming weeks and months will be to support our employees and their families and work closely with our community to help lessen the impacts of this change."

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42 Comments

by CWBW | 5th Jul 21, 12:23pm 1625444583

A lose-lose proposition for the country.

Economic loses, unemployment and losing a national strategic capability.

by J.C. | 5th Jul 21, 1:23pm 1625448239

Sure. And what will it do to Ruakaka house prices? Will they be unaffected? A butterfly flapping its wings?

by wortho | 5th Jul 21, 2:28pm 1625452095

House prices just keep on trucking in Ruakaka and the greater bream bay. Feels like you can buy today and flick tomorrow, make $50k. Sooo many AKL refugees bringing their million and making our $300k house $600k. Waipu Sections that were 200k 6yr ago, were 395k 12mth ago, 435k 6mth ago, 495k now. Yay. The land hasn’t improved, it still looks flood prone like 30yrs ago to me. New subdivisions in One Tree Point you get on a wait list for, 40 sites pre-sell to Housing Coys, corner ones left for regular Jo. I don’t think refining going will affect our Ponzi scheme, just the poor regular hard workers.

by J.C. | 5th Jul 21, 2:41pm 1625452899

Wow. Pick up your free money from the fountain as you turn off SH1. My family has roots in the area. Wonderful part of the world. And the refinery isn't everything. There's farming, cafes, real estate sales, marijuana, or even thrash metal.

by rastus1 | 5th Jul 21, 3:43pm 1625456599

Great opportunity. Pull it down and create sections..build more houses to house the workers. The implicit govt and orr sanctioned investment that leads to economic roskstarism.

oh darn...where have all the workers gone?

by Burni | 5th Jul 21, 5:21pm 1625462481

It's destined to be the new deep water port serving Auckland don't you know.

by Becnz | 5th Jul 21, 6:24pm 1625466276

Would not be suprised if house prices go to the moon now that a major employer is closing.
May bring a new wave of buyers in EVs driving cashed up from Auckland now saying hey look the view is better now with the refinery gone,
At least locals can quickly cash up and move on I guess rather than be stuck in house with limited buyers or they may be unlucky if interest rates spike soon.

by xingmowang | 5th Jul 21, 12:26pm 1625444796

the far north losses refinery.

Akl will loss NZ Steel.

Taranaki is lossing oil and gas.

The far south is lossing the smelter.

NZ is lossing all its manufacturing capability.

by chemistpeter@g… | 5th Jul 21, 12:56pm 1625446562

Kawerau losing a newspaper plant also last week. Will also lead to importing the useful residues from refining such as bitumen, sulphur. These will also need to be imported. Importing gives you more uncertainty and we will have to stock more material incase of supply chain disruption.

by two otherguys | 6th Jul 21, 1:51pm 1625536293

We will go back to gravel roads, no footpaths, septic tanks

by youngdumbandbroke | 5th Jul 21, 12:56pm 1625446593

I actually agree with you for once. The government is doing it deliberately in the name of climate change. Bonkers

by Burni | 5th Jul 21, 12:58pm 1625446717

Virtue signaling - damn the consequences

by youngdumbandbroke | 5th Jul 21, 1:29pm 1625448562

NZ is achieving environmental martyrdom

by Burni | 5th Jul 21, 2:41pm 1625452899

Hoisted by our own retard.

by DD62 | 5th Jul 21, 5:45pm 1625463955

Best comment for a very looooong time Burni!

by linklater01 | 5th Jul 21, 4:05pm 1625457945

youngdumbandbroke,

While I am old, loquacious and quite well-off, so it's not surprising if we see things from different perspectives. I accept the reality of human influenced climate change, so what should NZ do? Of course, given our size, whatever action we take or don't take will represent only a rounding error globally, so perhaps we should do very little/nothing.
The problem i see with that -apart from a question of morality- is that it is likely to have adverse consequences from some of those with whom we wish to trade. Where we might agree is that I see no need for us to lead the pack. It may allow our politicians to strut the world stage, but we need to earn a living in order to pay for all the things we want.

by youngdumbandbroke | 5th Jul 21, 7:32pm 1625470374

For my generation at least, politicians have shown they know nothing about the people they claim to represent and would rather go after a vanity project to fluff their own nest than make tough decisions that will bring about change. We’ve become a society of instant gratification whether it be fast food, social media or cheap credit, and our lack of leadership is a symptom of this. No wonder we have a tone deaf government screaming climate change rhetoric from their ivory tower in Wellington while middle NZ struggles to get by each week. So in a way I envy you link. You lived through a period in NZ history that seems almost bliss compared to now.

by ACB | 6th Jul 21, 9:58am 1625522282

The argument that closing the refinery will reduce carbon-footprint is specious. NZ will continue to burn fossil-fuels produced elsewhere in the world so it is just smoke and mirrors.

by Larry76 | 6th Jul 21, 8:25pm 1625559900

What does this decision have to do with the government? Private owners made a dumb short term decision, just like all the others in the last 30 years. Are you advocating for a government bailout/state ownership of the refinery?

by Larry76 | 6th Jul 21, 8:31pm 1625560262

Define what the government is doing to close the refinery? It’s a shareholder decision.

Fact is - government built all these strategic assets and private capital can’t look beyond the next quarter to manage them properly.

by npc | 5th Jul 21, 1:53pm 1625449980

NZ has already lost it's mind, electing this clown show government.

I know something is seriously wrong when I find myself agreeing with xingmowang.

by JustAnOpinion | 5th Jul 21, 2:10pm 1625451039

lol classic :).

I am a huge fan of saving the world but I cannot see why NZ has to lead on all these aspects, particularly when we have such a small impact.

by Larry76 | 6th Jul 21, 8:27pm 1625560035

Solution - all countries divide themselves into smaller units of 5 million people, then no one has to do anything?

by Squishy | 5th Jul 21, 6:01pm 1625464908

Yep, winning the race back to living in caves and hunting with stone spear points.

by Burni | 5th Jul 21, 6:42pm 1625467377

Not allowed to fish widely soon. Nothing to hunt of note except Labour Green supporters but they'll taste of sour grapes.

by El Torso | 8th Jul 21, 12:26pm 1625703999

LOL Burni, it seems that the sour grapes are coming from the other end of the spectrum at the moment.....

by Becnz | 5th Jul 21, 6:31pm 1625466712

Got myself a new horse and cart today and have found a local plant that has leaves that can been used in place of paper.
Have just got a new rainwater tank and am off the grid so safe for when we get new water charges.
I have wild goats and pigs over back fence so safe for meat supply since we will soon start taxing meat due to global warming.
Government is happy to let in super rich who will buy up much more assets and in return be looked after with our own PM who expects prices only to move up.
You will have nothing and be happy.

by Burni | 5th Jul 21, 6:43pm 1625467417

Ah the bushman friend. . .

by Burni | 5th Jul 21, 12:57pm 1625446674

I'll look forward to the inevitable elimination of another margin resulting in cheaper fuel.

Cue Tui ad.

No justification to charge all that exise tax when there's no value added.

by linklater01 | 5th Jul 21, 1:26pm 1625448373

I wonder if this move makes NZ more vulnerable to any major disruption of the oil market?

I believe that we currently import almost 50% of total consumption, while proven reserves are little more that 1 year's consumption.

by JustAnOpinion | 5th Jul 21, 2:13pm 1625451187

Yes we have not reached that time on the clock yet. Those of us old enough to remember why Marsden was created in the first place can see it about to turn full-circle, and on top of that I suspect your estimates of our reserves are generous.

by Squishy | 5th Jul 21, 6:03pm 1625465009

For the most part the SPR is a paper hedge held in future dated contracts. There is no guarantee we could actually access oil or get it refined in an emergency.

by Burni | 5th Jul 21, 2:43pm 1625452986

But by 20 whatever we won't need oil - get with the programme.

by Warwick D | 5th Jul 21, 4:40pm 1625460059

In a strategic sense it sure does but then this mindless "gesture government" has already set us on the road to import dependency as regards liquid fuel stocks. When Labour shut down our offshore petroleum exploration it meant our domestic oil reserves had to decline with zero chance of replacement. Jacinda listens to the Greens too much and thinks that EV's will fill the gap; yeah right! Air travel in this country is going to get very expensive with time.

by Burni | 5th Jul 21, 5:24pm 1625462663

Cam burn diesel for power generation

by kiwimm | 5th Jul 21, 2:43pm 1625453001

Marsden point uses 31% of Northland's electricity - 230,000,000kWh per year. This is enough energy to run 100,000 EVs for 15,000km.

So Closing Marsden will reduce our coal usage too. Great for NZ but the refining that is done overseas will likely use more fossil fuels than doing it here.

by Burni | 5th Jul 21, 5:23pm 1625462613

NZ earning global NIMBY status.

by dollar_bill | 5th Jul 21, 2:48pm 1625453302

Not sure about everyone else but Gulls petrol works just as well in my car - and it's cheaper.

by Brock Landers | 5th Jul 21, 2:57pm 1625453857

Bet all those workers are regretting their big mistake of working and tax paying instead of being a house.

by Squishy | 5th Jul 21, 5:56pm 1625464607

Surely refining capability and physical storage are a core security issue for...any country or bloc. If we ever had major powers come to fisticuffs we'd need to be able to refine the SPR which is held in crude. At a push I'd far rather live without a national airline than starve as society rapidly collapsed without petrochemicals.

by WestieAJ | 5th Jul 21, 10:50pm 1625482209

Just a ploy to extract more profit from a monopoly. Gull has to land their fuel in tankers at Tauranga and then truck 250 km to Auckland in tankers. They can still compete head to head on price with the other major petrol companies that use a common pool of fuel that lands at Marsden point refinery and is sent down a pipeline all the way to South Auckland and stored on-site at a NZ Refining terminal 30km max away from the majority of Auckland petrol stations. All 3 of those assets refinery, pipeline and Auckland terminal were practically gifted to those oil companies by the 4th Labour government. Ironically to protect the then 1500 jobs of refinery workers.

by Pipi | 6th Jul 21, 9:27am 1625520430

I am hoping this is good news for consumers. Marsden point is a very inefficient refinery, with all major oil players in cahoots, clipping the ticket. It puts an artificially lifted floor under fuel prices, not just for locally manufactured fuel but also imported ones to make up for the lack of capacity. After all, why would any one of them undercut themselves?
This has been allowed to happen for decades. No government has had the spine to call it what it is: a cartel.