The refinery company, which is 73 per cent owned by the major oil companies, would have trouble convincing its international shareholders that the spending was justified, given the absence of any policy detail about the implications of New Zealand's ratifying the Kyoto Protocol.
Frazer said later that officials were aware of the refinery's concerns.
The Government has indicated it will deal with major emitters such as the refinery through negotiated greenhouse agreements or NGAs.
The refinery has already cut its emissions per litre of fuel produced by 8 per cent from 1990 levels, a secondary effect of the continual drive for greater energy efficiency in its processes.
But the production of clean fuels is more energy intensive and would increase emissions by between 10 and 15 per cent.
Frazer would not quantify how much of an increase in cost would trigger a decision to close the refinery.
"We cannot pass the costs on to our customers because we work on import parity pricing."
The refinery meets about 67 per cent of New Zealand's petrol requirements and about 90 per cent of its diesel demand. The remainder is imported from Asian refineries which would not be subject to the Kyoto Protocol.
Any switch in demand from Marsden Point to those refineries, in Singapore, Korea or Taiwan, would make no difference to global emissions of greenhouse gases - a phenomenon known as leakage.
The Government has said that climate-change policies would reflect the need to avoid leakage and to maintain New Zealand's competitiveness.
"We are clinging on to those sound-bites," Frazer said.
The refinery employs 350 people. If its output were replaced by imports, the additional cost would be about $175 million a year. The Government would lose about $60 million in tax revenue.
nzherald.co.nz/climate
Intergovernmental Panel on Climate Change (IPCC)
United Nations Environment Program
World Meteorological Organisation
Framework Convention on Climate Change
Executive summary: Climate change impacts on NZ
IPCC Summary: Climate Change 2001
