Refining NZ sends out further signals Marsden Point oil refinery may close

Monday, 17 August 2020

NZ Refining says talks with customers and government stakeholders over the future of its Marsden Point refinery are continuing.

Refining NZ has sent out further signals that it will seriously consider closing its Marsden Point oil refinery at the same time as reporting a $186 million loss.

Chief executive Naomi James said it was continuing to talk to fuel buyers and the Government about the option of instead importing refined fuel, such as petrol and diesel.

First Union organiser Justin Wallace said in June that it had been advised that at least 90 per cent of the 1100 Northlanders whose jobs depend on the refinery would lose their jobs if that happened.

Wallace said about 400 and staff and 250 contractors worked at the refinery itself, but Refining NZ spokeswoman Ellie Martel said the latter figure was out of date and the number of contractors is 150.

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

The potential closure of the Marsden Point refinery and the Tiwai Point aluminium smelter, and questions over the long term future of the Glenbrook steel mill, have together cast a pall over the future of New Zealand’s heavy industries.

* Marsden Oil Refinery prepares for sleep mode

Wallace warned the overall job losses in Northland would be higher and another 2400 workers outside the region that supplied services to Marsden Point would also be impacted if refining ceased.

Refining NZ plunged to a net loss of $186m for the six months to the end of June, which compared with a $3.5m loss in the same period last year.

The bulk of the loss resulted from a previously-announced $158m write-down, but its revenues also fell 31 per cent to $119m as a result of lower refining margins and reduced demand for fuel, particularly jet fuel.

NZ Refining shares were trading up 1 cent at 68c shortly after trading opened on the NZX.

Refining NZ announced a plan to simplify its operations in June while it considered a switch to importing refined fuel.

James said on Monday that the simplification programme would reduce the company’s costs and give it “optionality to continue refining operations in the near-term while we assess the potential option to transition to an import terminal in the future”.

“We continue to work closely with our customers to assess the longer-term options and with government and other stakeholders to ensure there is a planned and coordinated approach to future changes,” she said.

Refining NZ plans to provide an update on its plan around the end of September.

Energy Minister Megan Woods has so far indicated no strong case for the Government to intervene to ‘save’ the refinery on any grounds related to fuel security.

She said in June that the Government had been assured New Zealand’s fuel supply would remain secure if the refinery closed, as it would be possible to source fuels from “multiple refineries in multiple locations to minimise supply risks”.