Port Taranaki eyes LNG import role as profit falls 50.4%

Wednesday, 28 August 2024

As Port Taranaki comes to grips with a 50% full-year profit drop, the company’s boss is hailing its potential to become an LNG import hub within 18 months.

Port Taranaki chief executive Simon Craddock said a combination of challenging economic and market conditions plus production difficulties in the energy sector were to blame for the New Plymouth port’s lower than expected annual result.

For the 12 months ended on June 30, Port Taranaki recorded net profit after tax of $6.88 million, down 50.4% from the previous financial year’s all-time record of $13.87m.

High interest rates and inflation, increased insurance costs, reduced gas production, lower log export volumes, and increased operational costs had all combined to impact the profit result, Craddock said.

“The result is lower than we budgeted, but it is a reflection of difficult production and trading conditions for many of our customers, particularly in the energy sector, and the challenging economic conditions that have seen our costs increase.”

Revenue was $54.01m, down $3.42m on the previous year’s revenue of $57.43m.

Operating expenses were $32.41m, an increase of $2.44m. This was offset slightly by repairs and maintenance costs dropping to $4.13m, from $4.21m.

The port, which is wholly owned by the Taranaki Regional Council, has declared a final dividend for the year of $3m. Total dividends paid to the council were $8m for 2023-24.

‘Benefits for our location’

The results come amid a national energy crunch that has led several factories to dial down or stop production, and on Monday the Government announced it would pave the way for imports of liquefied natural gas (LNG) as part of its solution.

On Tuesday, Craddock told Newstalk ZB’s Mike Hosking Breakfast show that Port Taranaki could be ready to import LNG by early 2026 if new regulations were passed.

“What we’re doing here at the port is looking at how we can play a role and stand up a solution that’s low cost and high capacity,” he said.

“But we’ll just have to wait for all of the industry to get together and the enabling regulations to be put in place.”

Craddock said there was “definitely a coalition of the willing” within the industry that saw the benefits of LNG imports.

“We’re in contact with the major players that would be interested in it, and we’re looking at the benefits of our location.

“We think our existing infrastructure, available capacity, proximity to the Maui gas pipeline and potential connection to existing underground gas storage means we’ve got a number of benefits for our location.”

New Plymouth MP David MacLeod, a former Port Taranaki director, said importing LNG would be a “stopgap measure” to help keep energy prices down until New Zealand was able to produce more renewable energy.

Port Taranaki was the ideal import hub for LNG as it already had some of the necessary infrastructure in place compared with Marsden Point, he said.

It would be much cheaper than offshore options, which were “very, very expensive and difficult to engineer”, he said.

“I’m not saying this parochially for being the MP for New Plymouth; I honestly think, looking at all the options … [that] Port Taranaki makes sense.

“In my opinion, there’d have to be some really good reasons why it wouldn’t be there, and I haven’t be able to establish any … A lot of bills [will be] going through the House before Christmas to make sure we can get going with some of theses things.”

‘Right to put itself forward’

New Plymouth mayor Neil Holdom said there were “some concerns” from members of the public about the potential risks posed by an LNG import hub at Port Taranaki.

These would have to be weighed up alongside the costs and benefits of such a facility, he said.

“I think the port is right to put itself forward. It’s a community-owned strategic asset, it’s very well run, and they’ve got the capability around petrochemicals and liquids.

“So I think it’s got to be one of the top options. It will be good for the country right now, and Taranaki has always done what is good for the country.

“The port plays a strong role in supporting the economy.”

MacLeod said the gas and oil sector directly and indirectly employed about 9000 workers in the region and was responsible for about 38% of the Taranaki economy.