Diesel saga now burns with legal and secrecy intrigues

By CHRIS DANIELS

Fears of legal action and claims of commercial secrecy surround winter's tainted-diesel affair, estimated to have cost the country $7.5 million.

Allegations of faulty diesel clogging fuel filters emerged in May and it later became clear 350 million litres of potentially tainted diesel had reached the market.

The New Zealand Refining Company, which processed the fuel at its Marsden Point refinery, said it had "either incurred, suffered or provided for" costs of $4 million stemming from the sale of the diesel.

It said total costs to customers and itself were "unlikely to exceed $7.5 million".

These costs were mainly due to the compensation paid to customers who needed new filters installed.

Oil companies sold their remaining diesel at full price, even when the problem became known.

Samples of the diesel have been sent for testing at three laboratories by three separate parties - a lab in Melbourne for the refining company, scientists in Singapore for the Government, and German technicians for Clariant, the company which supplied the anti-freeze additive Dodiflow that was implicated as a possible cause of the clogging.

NZ Refining managing director Alan Davey said the company's investigation was now complete, and the results - marked commercially confidential and legally privileged - were now with the Ministry of Economic Development.

Mr Davey said the report had been labelled this way because of "various possible claims between various companies".

"The oil companies think we're liable for some stuff and we are also talking to the supplier of the chemical. All of those discussions are at a very sensitive stage.

"There is no litigation initiated, but all the companies have said to each other, 'If we can come up with a good case against you, we are going to hold you liable for what happened'."

NZ Refining is mostly owned by the big oil companies, but Mr Davey said the prospect of legal action was being taken by them acting as customers, not shareholders.

He hoped a resolution could be negotiated among the parties, without any need for expensive and potentially lengthy litigation.

BP spokeswoman Jane Diver said the company had paid $280,000 to 4900 claimants.

Most of the money had gone to the installation of new fuel filters, although some had been claimed for loss of earnings.

Shell has paid out $282,000. The Gull and Challenge chains were the only ones not to sell the dubious diesel.

Murray Nancekivell, managing director of Chemcolour, which distributes Dodiflow, said it was too early to say what caused the winter difficulties, and the company's investigation was not yet complete.

No agreement had been reached on the cause of the problem with the diesel, he said.

NZ Refining is largely owned by five major shareholders: BP, 23 per cent; Mobil, 19.2pc; Shell, 17.1pc; Canadian investment company Emerald Capital Holdings, 14.3pc. The smallest of the big four oil companies, Caltex, owns 12.7pc.

It posted a 15 per cent drop in net profit to $16.45 million for the half-year to June.