Breakdown to cost oil refinery up to $17m

By Mike Dinsdale -
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Marsden Point Oil Refinery. Photo/Michael Cunningham
Marsden Point Oil Refinery. Photo/Michael Cunningham

A compressor breakdown has extended the Marsden Pt Oil Refinery's planned shutdown by up to 10 days and could cost NZ Refining up to $17 million in lost earnings.

Refining NZ communication and external affairs manager Greg McNeill said the problem, which led to the shutdown of the refinery's hydrocracker that makes diesel, should not affect the country's fuel stocks, but will hit the company's bottom line.

Mr McNeill said the shutdown, which started in early march, was due to finish earlier this month, but as the hydrocracker was being started up again on Sunday an associated compressor - which was not part of the shutdown maintenance - failed.

The company had a replacement part on site for the compressor, but also had to determine what went wrong with the part before the compressor could be repaired and the hydrocracker started up again, likely to be late next week.

He said the lost production time was likely to cost Refining NZ between US$10 million and US$15 million ($17,823,193) in lost processing fee revenue - last year the company had total revenue of $223.2 million - but won't lead to diesel shortages or higher prices at the pump. It was also unlikely to have any effects on refinery staff.

"Before any scheduled shutdown like this we put plans in place and that includes getting a stockpile of fuel around the country.

As well, some of our customers source extra supplies from overseas," Mr McNeill said.

He said the remnants of Cyclone Lusi and another small unscheduled problem had already delayed the shutdown's completion, but only to a minor extent while the compressor issue had added about 10 days.

The company has now reduced its annual processing forecast for this year to 40.5 million barrels from an earlier estimate of 41.5 million barrels, and below last year's 40.6 million barrels.

The refinery will continue to manufacture fuel products by using processing units that are not part of the shutdown and other processing units that have completed the planned maintenance.

The refinery supplies about 80 per cent of New Zealand's refined fuel needs.

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