National would look to keep refinery in a state where it could be turned back on

Monday, 9 August 2021

Energy Minister Megan Woods says stopping refining won't increase fuel supply risks.

The National Party has suggested the Marsden Point oil refinery could be kept on standby so it could be turned back on in the event of a crisis that impacted international fuel supply lines.

Refining NZ shareholders voted on Friday to shut down the refinery with the expected loss of 240 jobs and switch to distributing pre-refined fuels that would be imported from around Asia.

The National Party, E tū union and some Refining NZ shareholders have voiced concern the change could make fuel supplies more vulnerable in the event of a crisis that affected global supply chains, despite an assessment by Energy Minister Megan Woods that the risks would be little changed.

National Party energy spokeswoman Barbara Kuriger said a National government would explore ways to keep the refinery in a state where it could be “turned back on in the future, such as in the case of a global disruption”.

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The party viewed the refinery as a strategic asset for energy security, Kuriger said.

The Marsden Point refinery will close mid-next year assuming Refining NZ’s board wrap up the details of a transition as planned by the end of September.

“This was New Zealand’s only refinery. It seems an unnecessarily risky move from the Government to let it close without exploring other options.”

A Refining NZ spokeswoman noted shareholders had voted overwhelmingly in favour of closing the refinery after a “lengthy review” and said it was not in discussions about any other way forward for the business.

But the company did not intend to demolish the facilities on site immediately and would be working through the “repurposing options” before any decisions were made, she said.

The refinery declined to comment on the staffing practicalities of keeping the refinery idle but in a state of readiness for future production saying it “couldn’t get into hypotheticals”. E tū has also been approached for comment on that topic.

Refining NZ chairman Simon Allen outlined possible alternative uses for the site on Friday, saying it could be used to import, store or produce biofuels or hydrogen, or used to produce solar energy.

National Party MP Shane Reti notes Australia has chosen to keep two refineries open, subsidising their operation with a small fuel levy.

Barry Sheridan, chief executive of independent petrol retailer chain NPD, said he believed the closure of the refinery and the switch to importing pre-refined fuels would result in cheaper petrol.

Woods has blamed competition from “super-refineries” in Asia for undermining the economics of the refinery, but Kuriger blamed “poor policies” from Labour.

“From a rushed oil and gas ban to the proposal for a pumped hydro scheme, Labour is undermining investment and creating uncertainty,” she said.

Whangārei-based National list MP Shane Reti said he had had several meetings with Refining NZ chief executive Naomi James, to talk about how the refinery could be maintained.

“Marsden refining is a national strategic asset, and we need to examine how we might future-proof that asset,” he said.

Reti noted the Australian government made a decision to keep refining going there, funding that with the help of a 1 cent per litre levy.

While Reti acknowledged alternative fuels, such biofuels and hydrogen, could be part of the refinery's long-term future, he described hydrocarbon refining as strategic.

“Before we drain the fluids out, let's have the discussion on what the current case is. Once they've started decommissioning Marsden it will be too late,” he said.

Whangārei resident Chris Leitch, leader of political party Social Credit, has started a petition calling on the Government to declare the refinery a nationally strategic asset and to turn it back into a state-owned enterprise by compulsorily buying the shares from their private owners.

Leitch said he was pleased with the response to the petition which has nearly 2500 signatories.

The Government needed to listen to experts from New Zealand and Australia who had criticised the planned closure, he said.

“If there was a national disaster or geopolitical event that stopped ships getting here with either refined fuel or crude, the refinery has the ability to process the oil being taken out of the ground around New Zealand right now, to keep the emergency services going,” he said.

“That can only happen if we have a working refinery.”

Refining NZ’s spokeswoman said that following the switch to an import model, the company, which would be renamed Channel Infrastructure, would have about 180 million litres of tank space on site to store fuel, “as well as capacity to provide additional private storage by repurposing existing tanks if it is required”.