Ending refining at Marsden Point could impact 3500 jobs, says union

Thursday, 25 June 2020

Refining NZ could shed two-thirds of the 650 staff and contractors directly employed at Marsden Point, the First Union fears.

More than 400 staff and contractors could lose their jobs and thousands more could be impacted if Refining NZ closes the Marsden Point oil refinery, the First Union says.

In total, across the country, the refinery directly or indirectly provided work for 3500 workers and contributed 8 per cent of Northland's GDP, First Union organiser Justin Wallace said.

Refining NZ, the owner of the Marsden Point oil refinery, said on Thursday that it planned to simplify the refinery side of its business but was also evaluating a proposal that would go further and see it switch instead to importing pre-refined fuel.

Wallace believed that if Refining NZ did close the refinery and switch to an import model, about two-thirds of the 400 staff and 250 contractors at the facility could lose their jobs.

The facility would still store fuel and pump it to Auckland via a pipeline.

* Investment in extra 'fuel security' at Auckland Airport may be delayed

* Glut of cheap oil pushes Refining NZ into strategic rethink

The mood at the refinery in the wake of the company's update on its strategic review was 'not very good', he said.

'Everyone is on a bit of a downer now with the company pretty much focussing on a low cost model.'

National Party MP for Whangarei, Shane Reti, said he had been in contact with 'senior officials' at Refining NZ over the past week and had 'impressed on them the importance of retaining the industry and jobs in the region'.

'As the MP for Whangarei I am very concerned.

'Together with a jobs reduction at the close-by Carter Holt Harvey LVL plant these actions will have a big impact on the local Bream Bay economy,' he said.

Wallace said Refining NZ last year developed a proposal for a 'green hydrogen' plant at Marsden Point that could have guaranteed the future of the refinery's existing workforce and created additional jobs.

Green hydrogen is used to describe the process of making hydrogen from renewable electricity.

But an approach for funding through the Provincial Growth Fund had not advanced, he said.

'Somewhere along the line, around November, that disappeared.'

Refining NZ has been approached for comment.

Energy Minister Megan Woods said the Government had been 'engaging with the refinery throughout its review'.

'We are assured that New Zealand’s fuel supply will remain secure because we can source fuels from multiple refineries in multiple locations to minimise supply risks, should Refining NZ switch to a fuel import business model,' she said.

'We’ll continue to monitor developments and work with Refining NZ where necessary to ensure that economic opportunities in Northland can be maximised and utilised,' she added.

The First Union has about 180 members at the refinery covered by a collective agreement.

The refinery has been grappling with a global collapse in refining margins and a sharp fall in the demand for jet fuel.

Competition from newer refineries in Asia is increasing, and chairman Simon Allen said margins were expected to remain at historically low levels for an extended period of time.

The difficulties were exacerbated when motorists stayed off the road during the coronavirus lockdown.

Although demand for petrol and diesel has almost recovered, refining is currently suspended at Marsden Point for several weeks in July and August to let fuel demand catch up with supply.

Z Energy welcomed Refining NZ's proposal to scale back its operations and said it would like it to switch to an import model.

''Z has made it clear to the board of Refining NZ, to Z shareholders and to our customers, that we believe moving to an import terminal model is the best outcome for the refinery and New Zealand,'' chief executive Mike Bennetts said.

Marsden Point was set up in the 1960s to ensure New Zealand had a secure and competitive fuel supply and it handles about two-thirds of the country's fuel needs.

But internationally the number of refineries is shrinking due to economies of scale, although they are also costly to decommission.

Refining NZ indicated repurposing some of the refinery's facilities for green fuel production remained an option.

Chief executive Naomi James said it would look at working with the Government and other stakeholders to see what a transition might look like.

Allen said Refining NZ expected to finalise its plans around the end of September.

A switch to importing refined fuel would require shareholder approval, he said.

While returns were important, the company was also conscious of the significance of the options it was considering on its staff and nearby Whangarei, he said.

''We will continue to work closely with all stakeholders to ensure the right decisions are made and implemented in a planned and co-ordinated way to ensure the safe, reliable supply of quality fuels to New Zealand now and into a lower carbon future,' he said.