Inquiry into reopening New Zealand’s only oil refinery Marsden Point gets under way

The refinery at Marsden Point, southeast of Whangārei, was decommissioned in 2022 and converted to an import-only fuel terminal. Photo / Michael Cunningham.

The Government is investigating the feasibility of reopening Marsden Point oil refinery in Northland, despite the refiring likely to cost billions and require a specialist workforce.

Associate Energy Minister Shane Jones announced the investigation on Wednesday, saying New Zealand moving on from its reliance on fossil fuels was “the stuff of fairy tales”.

The privately owned refinery was New Zealand’s only fuel refinery until it was decommissioned in 2022 to become an import-only fuel terminal under the name Channel Infrastructure.

But NZ First’s coalition agreement with National involved investigating its possible reopening, as part of work to ensure New Zealand has a secure fuel supply.

Jones said the agreement includes establishing a fuel security plan to safeguard New Zealand’s transport, logistics and emergency services from any domestic or international disruption.

“Despite the desire we all share to see NZ free of its reliance on fossil fuels in the near future, that is the stuff of fairy tales. NZ will continue to need gas and coal to keep our economy moving for decades to come,” he said.

“When Marsden Point oil refinery closed, not only did it rob Northland of a major employer, but it also potentially put NZ’s fuel security at risk. It was responsible for producing the majority of our jet fuel, all shipping fuel oil and more than half of our diesel,” Jones said.

“A significant and sustained disruption to our engine fuels would cripple our industries and put NZ in hardship. That’s why I am commissioning this study into NZ’s fuel security requirements.”

The work will also include planning for a transition to low-carbon fuels and consideration of the infrastructure needed to increase the use of methanol and hydrogen to ensure New Zealand has sovereign fuel resilience.

A Northern Advocate investigation last month found reopening the refinery would cost billions of dollars and require a specialist workforce that has already moved on, according to Channel Infrastructure chief executive Rob Buchanan.

“The refinery is now fully decommissioned and, while we haven’t undertaken formal costings, we would expect the cost to recommence refinery operations at Marsden Point would be in the order of billions of dollars, and take a number of years... There is no part of the former refinery that can be restarted,” he said.

The refinery was also unable to refine New Zealand crude, with only about 2 per cent of crude coming from New Zealand and the rest being imported, mostly from the Middle East.

At the time of the closure, the then-Labour Government was reassured New Zealand’s fuel security would not be put at risk, with oil companies saying resilience would be enhanced as the country would be less reliant on a single refinery.

The Government is developing a Request for Proposals - the first step for a tender - for the investigation and the study is expected to begin later this year.

Denise Piper is a news reporter for the Northern Advocate, focusing on health and business. She has more than 20 years in journalism and is passionate about covering stories that make a difference.