Australia's Ampol looks set to take over Z Energy. Photo / Supplied
Australia's Ampol looks set to take over Z Energy. Photo / Supplied
Z Energy first came on to Ampol's radar screen when the country's sole oil refinery started making noises about becoming an oil terminal.
Now, the company - Australia's biggest fuel supplier - will take its takeover proposition to shareholders on Friday, having been given the green light by the NewZealand Commerce Commission this week.
After 60 years of operation, Refining NZ will start converting its refinery at Marsden Pt to a terminal from April 1.
Ampol is no stranger to shutting down oil refineries - it closed one of its own in Australia in 2014.
Now, it places a great deal of emphasis on its ability to trade in fuel in the energy hubs of Singapore and Houston - and ship it down under.
As Ampol chief executive Matt Halliday sees it, refinery closures are a sign of the times as refining margins tighten and as the world transitions to renewable energy sources.
At $2 billion, Z Energy is easily Ampol's biggest acquisition outside of Australia.
Ampol chief executive Matt Halliday. Photo / Supplied
Halliday said the import transition the New Zealand market and Z Energy are working through was key.
"I think there is good complementarity [with Z] with some of the skills that Ampol has in terms of the position we have with our trading and shipping business.
"And from a fuel security point of view, there is more confidence that we can bring to a full-import supply chain."
Halliday says that as the world transitions away from fossil fuels, scale will be increasingly important, whether that's in the form of financial muscle or shared capability and experience.
"I think the two businesses working together can achieve a lot more collectively than either business could working on its own," he told the Herald.
Against the background of the country's sole refinery becoming a terminal, Ampol could help manage the transition.
It has the experience, having closed one of its own refineries and embarked on a model that involves trading fuel in Singapore or Houston and shipping it south.
"That helps de-risk the transition to a full-import supply chain, so it's an important step forward."
Halliday says Russia's invasion of Ukraine has disrupted the world's energy market but he's not calling it an energy crisis just yet.
"It helps to underline the importance of having a number of different supply-chain options and to have refining-chain options as well.
"That means at any point in time we have more boats on the water - be they carrying crude or refined product.
"That means from a fuel security point of view, for New Zealand but also Australian, the combined entity can manage market interruptions to the extent that they occur because we have got greater scale."
Halliday expects Ampol to play a significant role as Kiwis convert to electric vehicles.
In Australia, it is in the process of rolling out 120 fast-charging sites, which it expects to complete by the third quarter of next year.
Halliday expects to "replicate and leverage" off its Aussie EV experience here but with added scale.
Refining NZ - part-owned by Z Energy - last month reported a net loss after tax of $552.6m, including a non-cash impairment of refining assets and the recognition of restructuring provisions associated with the conversion.
Halliday said Marsden Pt had played an important role in New Zealand for many years but the refining sector had been under pressure, globally, for some time.
"It's not really going to change. There is going to be an evolution as we part-transition over the longer term and that's going to put more pressure on refineries.
"The key is to make sure that the capacity is in place and to make sure that fuel security is well managed as we make that transition."
Z Energy part owns Refining NZ. Photo / Supplied
The takeover of Z Energy is taking place while the energy sector globally is under pressure, but Halliday is not calling it an energy crisis just yet.
Russia's invasion of Ukraine had created volatility but the price of crude oil has come back off its peak.
"What we observe is that markets are still very well physically supplied, but you will see the supply chains restructured as different countries make different decisions.
"That's typically what we would see in these situations, so it's not a crisis in the availability of fuel, per se."
This week, the Commerce Commission granted Ampol clearance to buy Z Energy, subject to Ampol selling Gull, New Zealand's third-biggest fuels company. Ampol purchased Gull New Zealand for A$325 million in 2017.
Ampol said it would sell Gull to Australian investment firm Allegro for $572m.
"The commission is satisfied that, if Ampol sells Gull, the acquisition will not have or be likely to have the effect of substantially lessening competition in any relevant market in New Zealand," commission chair Anna Rawlings said.
At Friday's Z Energy meeting, shareholders will vote on the offer, which is by way of a scheme of arrangement.
Under its terms, Z Energy shareholders would receive a cash offer price of NZ$3.78 per share and will also receive the first 5c per share of the interim 2022 dividend.
