Northland's Marsden Pt Oil Refinery posts massive loss in final year of trading

After posting a heavy loss, Refining NZ is focusing on moving to a fuel import terminal business from April. Photo / Michael Cunningham

After posting a net loss of $552 million in its last year of operation, Refining NZ is now focusing on successfully transitioning to a fuel import terminal in five weeks time.

The bulk of the massive financial loss has been attributed to the ongoing impacts of Covid lockdowns and plummeting demand for jet fuel in particular.

The financial result compares with a loss of $198m in 2020 and company management and board are now focused on transitioning from a refinery to an import terminal model that comes into effect from April 1 under the name Channel Infrastructure.

Earnings before interest, taxes, depreciation and amortisation (EBIDTA) increased by 44 per cent to nearly $73m last year and borrowings reduced to $183m compared with $231m in 2020.

Refining NZ chief executive Naomi James said the additional private storage capacity of 100 million litres in addition to 180 million litres of shared import terminal capacity would generate about $90 million of incremental revenue over 10 years.

"Transition to fuels import terminal is now imminent, with conversion cost estimates and an expected return to dividends within one to two years of commencement of import terminal services reconfirmed,'' she said.

''In 2022, the immediate priority is to safely deliver the import terminal conversion, transition our organisation from a refinery to terminal business and to support our people through the transition and into new employment.

"In 2021, petrol and diesel demand showed strong recovery outside of lockdown periods, however jet demand remains low at around 30 per cent of pre-Covid levels while international border restrictions remain in place.

"The additional fuel storage that we have announced is the first of a number of complementary growth opportunities for us at Marsden Point. With change comes opportunity, and through the changes we are undertaking at Marsden Point, Channel Infrastructure is well positioned to diversify what we do and support New Zealand's future fuel needs, ensuring our operations will continue to play a crucial role in keeping New Zealand moving."

James acknowledged the effort of everyone to ensure no recordable injuries on the site in more than two years.

Refining NZ said conversion to an import terminal would reduce the company's direct carbon dioxide emissions by almost one million tonnes per annum, delivering around a third of the Government's first Emissions Reduction Budget.

From April 1, fuel from Marsden Pt will be distributed by BP, Mobil and Z Energy primarily to the Auckland and Northland markets through the 170-kilometre Refinery to Auckland Pipeline (the RAP) and the truck loading facility adjacent to the Marsden Point site.