Refinery closure would cost 1000 Northland jobs and push up fuel prices, says union

Friday, 26 June 2020

End to refining could cost about 1000 Northland jobs, latest information suggests.

The First Union says Refining NZ has advised that at least 90 per cent of the 1100 Northlanders whose jobs depend on the Marsden Point oil refinery would lose their jobs if it switches to importing refined fuel.

Union organiser Justin Wallace had estimated on Thursday that about two-thirds of the 400 staff and 250 contractors employed at the refinery itself would lose their jobs.

But he said Refining NZ had advised that a total of '1100 high skilled jobs in Northland dependent on the refinery [would] be lost if it becomes a simple import terminal employing at best, 10 per cent of its current number in the medium term'.

That information 'came directly from the company out of presentations that they have given', Wallace said.

He reiterated that another 2400 workers outside the region that supplied services to Marsden Point would also be impacted if refining ceased.

Z Energy boss Mike Bennetts says import model is the best option, but BP and Mobil have yet to commit.

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Refining NZ did not comment on whether it had provided those figures, but said there was no plan to close the refinery and turn it into an import terminal for refined fuel as yet.

'All we have said is that we will evaluate the potential to move to a terminal at some point in the future,' chief executive Naomi James said.

Z Energy, which owns 15 per cent of Refining NZ, has publicly backed the idea of Refining NZ closing its refinery and instead importing fuel.

Energy Minister Megan Woods has made no signs of intervening, saying she's been assured import model wouldn't compromise NZ's fuel security.

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

Mobil, which owns 17 per cent of Refining NZ, and BP, which owns 10 per cent, have yet to clearly show their hands.

A BP spokesman said it was 'supportive of the strategic review' Refining NZ was undertaking, while Mobil spokesman Rob Fitzgerald said it was 'assessing the implications for its business'

James told staff in a video presentation that she could not say when a decision would be made.

'We will need to go through evaluations discussions and negotiations before we get to that point.

'This may not happen for some time,' she said.

In the meantime, the refinery had decided to 'simplify' its operations over the next six months to make it more competitive, she confirmed, with an update expected in September.

'At this point, I can't tell you what this means for jobs,' she told staff, with regard to the near-term simplification programme.

Louis Houlbrooke, a spokesman for the Taxpayer Union lobby group, indicated it believed Refining NZ might be angling for government assistance, saying it saw 'echoes of Tiwai Point' in the situation.

'Threatening an import-only model at Marsden Point is a classic case of industry lobbyists trying to turn a profit in election year by pressuring politicians for a handout,' he said.

However, he acknowledged that was an assumption and that the lobby group had no direct evidence Refining NZ was seeking such a handout.

There appear to be some indications those suspicions may be misplaced, with James saying Refining NZ would not expect fuel prices to increase if it switched to an import model.

Energy Minister Megan Woods indicated on Thursday that she had been receiving the same message.

'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.

James said refining margins were likely to be low for years to come and the refinery was unsustainable in its current form.

But Wallace said fuel prices would rise if the refinery closed.

'If people think fuel is going to drop – it's not.

'The whole reason the refinery was put in was to make fuel prices cheaper.'

Refining NZ was going through the proper process and not being 'ratbags', he said.

But Wallace said the union's members wanted it to speak up and for 'Wellington and New Zealand to understand the potential outcome of this'.