Gas shortage: Channel Infrastructure eyes role in LNG importation, boosts interim dividend

Rob Buchanan is keen to see Channel Infrastructure play a greater role in New Zealand’s decarbonisation and energy resilience. Photo / Tania Whyte

Channel Infrastructure has indicated it wants to be part of any Government plan to import liquefied natural gas (LNG) to offset continuing gas shortages.

Presenting its half-year results today, the Marsden Point-based company — formerly Refining NZ — said it was focused on potential opportunities relating to New Zealand’s energy transition and resilience.

The company said it had nearly finished a concept plan to unlock value from 120ha of unutilised land at Marsden Point.

“This plan will highlight the significant role for our unique site in supporting New Zealand’s energy transition through potential opportunities such as renewable fuels and other biofuels, LNG and energy storage,” Channel said.

Energy Minister Simeon Brown this month said the Government was seriously considering importing LNG to fill an energy shortfall that was already crippling several large manufacturing plants, including Winstone Ruapehu and Oji Penrose.

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Soaring gas prices combined with low hydro lake levels have sent wholesale power prices to record highs, sparking concerns about the viability of more businesses and jobs.

Importing LNG is a preferable option to importing and burning more cheap coal from Indonesia, but would require further investment for storage, conversion to gas and distribution.

Channel is also firmly focused on future-proofing jet fuel supply, including feasibility studies with Australian company Fortescue on sustainable aviation fuel production and storage.

Channel reported a net profit of $12.8 million for the six months to June 30, down 12 per cent on the previous corresponding period, largely due to higher finance costs.

Revenue was up 8% to $69.8m and earnings before interest, depreciation and amortisation (ebitda) rose 11% to $48.1m.

The board announced an unimputed interim dividend of 4.4¢ a share, up from 4.2¢ previously.

Operational highlights included a 22% uplift in jet fuel demand, with volumes now at 94% of pre-Covid levels. Demand is forecast to increase about 50% by 2050, driven by higher demand for travel from the growing economies of India and Asia and rising air freight volume.

Chairman James Miller said the company remained “committed to working constructively with the Government” on its fuel security study.

“The board’s vision is for Marsden Point to be an energy precinct for New Zealand and we have made good progress towards delivering on this vision, including progressing opportunities with Fortescue on sustainable aviation fuel manufacture.”

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Chief executive Rob Buchanan said Channel had several near-term growth opportunities at Marsden Point.

“We have a critical role to play in providing resilience for New Zealand, and over the past two years, we have commissioned over 100 million litres of storage for our customers. Adding to this, today we announced an additional jet fuel storage contract which will further support New Zealand’s resiliency.”

Channel shares opened trading today at $1.57 and have traded in a tight range since last September.