Mobil posts $183m profit as confusion reigns over impact of refinery closure

Friday, 3 June 2022

• Company says profit was not driven by higher fuel margins

• No sign of regret over Marsden refinery closure in industry, despite 40c/litre jump in global refining margins

Mobil has posted a bumper profit as petrol prices hover around new highs and confusion reigns over whether motorists may be paying a price for the closure of the Marsden Point oil refinery in March.

ExxonMobil reported an after-tax profit of $183 million for the year to the end of December, turning around a $159m loss the previous year.

Its revenues for the year jumped 30% to $2.7b, reflecting the rising price of fuel.

The profit was booked despite the first major recommendation from the Commerce Commission’s study into the fuel market taking effect in August.

**READ MORE:

* Why oil prices are spiking again

* First fuel, now food: is our competition watchdog letting us down?

* No last minute reprieve for Marsden Point oil refinery

**

Since then, petrol companies including Mobil have been required to advertise a “terminal gate price” at which they will sell fuel in bulk to other retailers, in a move that the commission assessed would increase competition.

Mobil country manager Andrew McNaught said that “rather than being driven by fuel margins” its profit had been largely based on cost savings, an increase in the value of the inventory it held, and a $21m upward revaluation of its shareholding in fuel distributor Channel Infrastructure.

BP New Zealand normally files its annual accounts by the end of June.

Z Energy last reported a profit of $92m for the six months to the end of September, turning around a prior-year interim loss of $58m.

Petrol prices have risen by about 30 cents a litre since the start of Russia’s war on Ukraine, despite a 29c/litre tax cut announced by the Government to soften the impact of rising prices.

Higher crude oil prices only account for about 19c of the 59c rise in the pre-tax price of petrol, with a huge leap in international refining margins appearing to add about 40c/litre.

Prior to March, most petrol sold in New Zealand was refined at the Marsden Point oil refinery, but Z, BP and Mobil agreed last year to close the refinery and switch to only importing pre-refined fuels.

The refinery closed at the end of March, just as global refining margins went through the roof.

Confusion remains over whether and how the refinery, petrol companies and drivers might have shared the benefit had the refinery stayed open longer, though AA policy manager Terry Collins said that was “now academic”.

A Z Energy spokesperson said that when the refinery was operating, it sold refined crude to the domestic market at a “largely equal price” to refined fuels on the international market.

That implies that the refinery would mostly have benefited from bigger profits had it stayed open, rather than consumers seeing much lower petrol prices than are currently charged.

But Channel Infrastructure spokesperson Laura Malcolm indicated that the prices that the refinery could charge for refined fuels were capped under its agreements with petrol companies.

“When we were operating above [a] fee floor, we didn’t get that, the customers sort of got 100% of that,” Malcolm said.

“The ‘quid pro quo’ was when we were operating below the fee floor, which we had been for at least the last two years, they subsided our operations,” she said.

US petrol-chemical company Neste is reporting that the average margin for global refiners has risen from about $10/barrel in January to more than US$50/barrel earlier this week.

A US$1/barrel rise adds about one New Zealand cent to the price of petrol in New Zealand, according to petrol company Gull and the AA.

Z’s spokesperson said it strongly believed the new import-only model for fuel “improves flexibility and resilience of the supply chain”.