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New Zealand's only oil refinery at Marsden Point to become an import-only fuel terminal

Business
New Zealand's only oil refinery at Marsden Point to become an import-only fuel terminal

New Zealand is losing its only oil refinery.

Refining NZ shareholders have voted overwhelming in favour of a proposal for the company to become an import-only fuel terminal, under the name ‘Channel Infrastructure’.

The change is expected to see 240 people lose their jobs over two years, leaving the company with just 60 employees.

Refining NZ board chairman, Simon Allen, said: “Ahead of a final investment decision to be taken by Refining NZ’s Board in coming months, the company will negotiate binding legal agreements with customers - including Mobil, who we are in advanced discussions with - and proceed with detailed engineering and design plans to enable this change.

“We expect to be operating as a fuel-import terminal by mid-2022, with full plant decommissioning and terminal upgrade works set to continue for a number of years.”

Refining NZ said: “The Company will utilise the deep-water harbour and jetty infrastructure of Marsden Point to import refined fuel, owned by its customers. This will replace the crude oil that our customers import today for refining.

“Fuel would be stored at the Marsden Point site in existing tanks at what would be the largest fuel terminal in New Zealand, with 180 million litres of shared capacity, as well as capacity to provide additional storage if required.

“Channel Infrastructure will continue quality fuel testing services both at the Marsden Point site and around New Zealand, through its IPL subsidiary.

“Fuel from Marsden Point would then be distributed on behalf of Channel Infrastructure’s customers primarily to the Auckland and Northland markets, which make up around 40% of New Zealand fuel demand, through the 170-kilometre Refinery to Auckland Pipeline (the RAP) and the truck loading facility (the TLF) located adjacent to the Marsden Point site.”

The industry group for energy intensive businesses, Energy Resources Aotearoa, said the decision was “understandable but disappointing”.

"This continues a worrying trend of de-industrialisation and job losses in the regions," CEO John Carnegie said.

"Recent examples include the closure of the Norkse Skog paper mill in Whakatane, Methanex mothballing their Waitara Valley plant and New Zealand Steel reducing production.

"While there are many domestic and global factors at play, the high cost of energy has been an element in all of these decisions.

"We are worried things will only get worse as our appetite for energy grows but economic and reliable renewable alternatives are not yet available.

"We all want to see a smooth transition to lower emissions, while protecting local jobs and keeping energy affordable and reliable.”

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42 Comments

labour will applaud thia decision as they expect NZ will be petrol and disel or even jet fuel free during their term in the office.

sigh~

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Misguided. Only OECD country with no refinery.

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Thats because we are Aotearoa now, just another poor Pacific Island nation reliant on foreign aid. I think we'll soon be kicked out of the OECD as we will bring their stats down.

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Well we already bring down the maths scores

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Over Educated, Culturally Dissonant?

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Under educated, Over qualified

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Not surprising shareholders opted to convert a productive manufacturing facility into a storage warehouse. It's all about legislative risk minimisation.

However, basic economics dictate that the further away you are from the original source of raw input, the higher the cost will be.

Expect fuel prices to be substantially higher than in the past.

We lost 2 birds at once: Strategic national security asset & commodity price bufferer.

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By that logic a Chinese TV would be more expensive then a NZ one.

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Is a Chinese TV a raw input to produce a NZ TV?

You're comparing finished product to finished product. I'm talking about raw materials value chain.

No wonder this country is going downhill.

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I think Gull and Challenge import refined fuel. They're cheaper that the others.

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government needs to go hard on refining parts of the site being cleaned up and properly disposed of

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true and maybe we should be celebrating less air,ground and water pollution.

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Just shifts the pollution to outside NZ

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Closure nothing to do with the govt. Workers winging about closure but in today's labour market should be easy to pick up work but not at the high incomes they are likely to have earned.
Any strategic reserve needs to be assessed and paid for by the govt. Nothing to do with the refinery.
If the govt was so concerned they could buy the Refinery but if it was anything like buying Kiwi Rail it would be at an over inflated price and most likely heavy maintenance and renewal expenditure that has probably been deferred in the last year or two.

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"We all want to see a smooth transition to lower emissions, while protecting local jobs and keeping energy affordable and reliable.”

The oxymoron, in a nutshell.

You need good-quality energy to do work. You need to do work to repay debt. All money is keystroke-issued as debt. Therefore you need good-quality energy, in the future, to repay debt. More keystroke-issued debt? More good-quality energy required.

Except we have burnt the best. It's gone. We're traversing the next=best and the next-best; read: ever worse. Ever less quality, ever less EROEI. So 'affordable' was already based on a falsehood, and is being increasingly so. Do-able would have been a better yardstick.

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Gotta start attaching sails to cars. Windy Welly won't have a problem with wind.

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There's a reason why half of NZ's roads are being turned into cycle lanes, and why the NZTA is now called "Waka"

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By half you mean like <0.1%? And isn't the reason to make cycling safe?

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"This continues a worrying trend of de-industrialisation and job losses in the regions"
~CEO John Carnegie~

Refining NZ giving-up-on refining has been talked about for years, indeed it was all but done-n-dusted a year ago.

The 'trend' of de-industrialisation is nothing short of ALARMING !! Once established industries (often established over a decade/half-century) go - they don't suddenly come back!

The NZ Dollar is NOT the World Reserve Currency, therefore we DO NOT have the luxury of shipping industry overseas and indefinitely importing goods back with printed fiat.

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Time to invest in horses. Or has the horse bolted?

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We sold them all to China. Some sheep are still left to pick

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electric bike or electric car would be a better choice.

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Very sad.
With china behaving like a loose cannon, really can New Zealand gamble its future against the chinese government.

Marsden Piont has and is a strategic asset and as such should remain in production.

Time for the woke government to push some dosh towards the refinery.

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I'll be looking forward to some Australian type fuel prices.

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735 million dollars invested since 2005! 365 million of that was recently spent on the Te Mahi Hou reformer. What a huge loss. What happens to all that infrastructure now? Does it get sold to foreign investors for pennies on the dollar or destroyed as scrap? I have a bad feeling about this de-industrialisation. I wonder if the greens realised that thing made hydrogen gas.

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Obviously we still have lessons to learn about supply chain resilience.

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Supply change resilience is not improved by importing crude oil and refining it v importing refined oil. Both rely on overseas markets and shipping.

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AR - exactly.

So many apply their prejudices and assumptions to what should be a pragmatic thought-process.

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The SPR is held in crude, maybe you can find some refining capacity in an emergency but more likely you won't. Don't think my car would run on crude.

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I understand that most refined product will be imported from Asia (Singapore Straits, South China Sea). If there is a conflict there then we are in trouble. There are many more places to import crude from however, including condensate in NZ (still?).

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Yes it is… what is conversion of one shipload crude vs diesel, peotrol, bitumen etc..

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The cost of fuel may change but it really doesn't need to as most of it is made up of TAX and the government could make it cheaper if they wanted to. Second we may get better quality fuel options and maybe even higher Octane ratings that my JDM Turbo that used to run on 100+ all those years ago would be happy on again. It could all be a change for the better.....then again if Labour is involved.

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The Refinery assets were transferred by the Government to the New Zealand Refining Company Limited, a consortium of the five major petrol retailers. BP, Mobil and Z Energy - a cut and paste - It was a labour government voted in in 1984 that has allowed for this situation to come about.

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Did they pay for it? Or get given it?

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I wonder if the Government will bring forward the building of the railway to the Marsden port wharf to help compensate and move dry dock facilities from Devonport. Why not the whole naval base?

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As a shareholder I voted yes. I've lost money my problem as I took a risk. I do not expect the taxpayer to bail me out. A lot of people wanting the government to buy it then accuse them of being communists in the next breath - have a think about that. Things change and energy is the big one. How it will play out im not sure as trying to stop hydrocarbon use is changing the whole way of the world and what runs us. I'm all for it and realize I will have to radically change behavior, consumption and lose money (as I have) but in the big picture of life I'm excited about the challenge.

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We don't need a refinery, just bring in a better finished product and increase the storage for it. If we were pumping oil in this country it would be a different story, keep it to maintain some self sufficiency but if we have to ship in oil its pretty pointless keeping a refinery, especially if its running at a loss.

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might as well build a "strategic reserve", or subsidised production in electric vehicles, and kill 2 birds with one stone.
Is z's tallow to diesel plant still operating. ?

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might as well build a "strategic reserve", or subsidised production in electric vehicles, and kill 2 birds with one stone.
Is z's tallow to diesel plant still operating. ?

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My understanding of what happens is that 1) We still bring oil up out of the seabed in NZ. 2) We then export it because it can't be refined at Marsden Point. 3) We then import crude oil from overseas to refine and distribute.

Is that correct? Albeit up until yesterday when we hear we won't be refining any more.

If so, how did we ever get into this situation?

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I think Nz's crude oil is already exported, and we import more foreign crude. Once its in a tanker it does not cost much to go a longer distance.

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How different it would have been if the govt had kept Petrocorp, kept it's refining capacity at Marsden Point and put the proceeds into an investment fund like the Norwegians did. Now the Norwegians have a 1.3 trillion dollar investment fund and New Zealand has few energy assets left in National ownership and is becoming poorer and more vulnerable by the day.

We are not Singapore, a small nation with a plan and brainpower, we are not Norway, a small country with a plan, energy resources and brainpower we are a small country with energy resources but without a plan and with a bunch of brainless fools refusing to make a plan for the future of our country other than let's shut everything down and save money.

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