Surge puts spotlight on refiner

NZ Refining shares soar as Shell and Mobil look to sell

New Zealand Refining's shares climbed to a 12-month high yesterday as signs emerged of intensifying competition for the assets of departing oil majors.

NZ Refining shares closed at $7.65, up 2 per cent after a near 5 per cent rise on Friday.

Big United States refiner and fuel retailer Valero Refining has been identified as a potential buyer for a stake in the Marsden Point refinery as Shell and Exxon Mobil look to quit their downstream presence here and concentrate on exploration.

Between them they own 36 per cent of the refinery and more than 400 service stations throughout New Zealand.

Valero, which also has a petrol retail and convenience store network in the US, has said it is interested in refinery acquisitions in the Pacific to meet Asian demand growth.

While Valero may be less interested in Shell and Mobil's filling stations, persistent market speculation points to Progressive Enterprises, The Warehouse and Foodstuffs as being potential bidders given their retail expertise.

Non-fuel sales contribute up to 75 per cent of profit at some filling stations.

Supermarket operator Progressive Enterprises said yesterday it didn't have any comment on speculation in the marketplace.

The Warehouse did not respond to inquiries and Foodstuffs last week was reported as saying it was not interested.

Foodstuffs already sells fuel at selected Pak'N Save sites and in Australia supermarket giants Woolworths and Coles control over 40 per cent of retailing.

In several countries, including Australia, Canada and the US, big oil companies have sold out of retailing to concentrate on exploration and distribution.

NZ Refining chief executive Ken Rivers said apart from Shell announcing its review nobody had contacted his company, which processes around 70 per cent of the country's fuel.

"The parties haven't been in touch about any of this so I'm following the trail with real fascination," he said.

Rivers said it did not surprise him that all shareholders had their operations under review given the difficult financial times.

Shell in February announced it had started on a possible sales process, Mobil will not comment on its moves, Chevron Caltex has sold some convenience stores but says it is committed to New Zealand and the biggest player, BP, yesterday said its assets were "definitely not for sale".

McDouall Stuart analyst John Kidd said there was a wide spectrum of possibilities for NZ Refining.

"You go from the status quo from being a feasible outcome ... right through to a possibility where all the major holders see an opportunity to exit and all of NZR ends up on the table," he said.

"The process that is unfolding is a little bit more competitive than it could have been."

He said the share surge of the past few days was largely the product of small time speculative buying. Goldman Sachs JBWere analyst Matt Henry said New Zealand Refining was an expensive refiner by international standards. "It wouldn't surprise me that if one of those stakes is sold it would be sold below what the current share price is at."