Refining NZ will reduce fuel production back to 1995 levels and cut jobs from next year as part of the first phase of its strategic review.
Refinery production will be reduced to about 90,000 barrels a day and the publicly-listed company will stop producing bitumen- a residue from petroleum distillation used for road surfacing and roofing.
The oil refinery plans to reduce its operating expenses by $20 million, which will allow the completion of key processing units that had been deferred this year.
Discussions will begin with employees on the size of its workforce, which currently stands at 400.
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Refining NZ is also discussing with customers the possible future, staged transition to an import terminal.
These discussions are ongoing and no decision has been made as yet.
"We have worked hard to keep the refinery operating, saving 300 jobs and playing our part in reliable fuel supply to New Zealand while we continue to explore longer-term options," Refining NZ chief executive Naomi James said.
"We are working closely with local, regional and national authorities and agencies to help our people impacted by these changes, and to minimise the impact of these changes on the Northland region," she said.
Sharply lower margins and throughput drove Refining NZ $186.4m into the red over the first half of the year to June 30.
The interim net loss compares with a $3.5m shortfall in the previous corresponding period last year.
The company said its income fell by $52.5m or 30.6 per cent, largely due to lower margins and throughput, while EBITDA was down $38.7m, or 71.5 per cent.