New Zealand Refining's profit has increased by 7.5 per cent to $31 million for the first half of the year despite margins being buffeted by the high value of the New Zealand dollar.

Chief executive Ken Rivers said the business environment had been difficult but the refiner's margins had strengthened.

Margins are calculated in US dollars and although they had increased from around US$5.50 to US$6.56 a barrel the greenback has ranged from NZ74c to NZ89c, averaging 78c during the six months to June 30.

"The business environment has been difficult - the outlook for the next six months is continuing US dollar weakness," Rivers said.

The company had been able to strengthen its liquidity position substantially, reducing debt from $86 million at the beginning of the year to around $54 million at the end of June. Margins around the world were strong because of continuing high demand, said Rivers.

There was some overcapacity and European refiners were struggling, United States refiners were doing well and there was continuing strong demand in Asia.

"It seems to be that demand is winning at the moment, which is nice to see."

In February the company began a feasibility study of what could be a $400 million to $500 million growth project aimed at increasing its share of the domestic petrol market.

It will spend $23 million on a report that will be presented to the board in February next year.

The company will pay an interim dividend of 3c. Its shares closed up 5c at $3.20.