Marsden Pt Refinery moves step closer to being import only terminal

Marsden Pt Oil Refinery has moved a step closer to being an import only terminal after Refining NZ got the green light from the third, and final, customer. Photo / Michael Cunningham

Marsden Pt Oil Refinery has moved a step closer to being an import only terminal after its third, and final, customer gave the project the green light.

Refining NZ, which runs the refinery, said it has now reached agreement with all three of its existing refinery customers, having today reached an in-principle agreement with Mobil to proceed with the import terminal conversion and transition to Channel Infrastructure.

The terms of the agreement with Mobil align with those recently approved by shareholders, with 99 per cent voting in favour of the change. This follows the company confirming last week it has also received lender consent to proceed with the conversion.

Shareholders in the country's only oil refinery earlier this month voted overwhelmingly for the refinery to become an import-only fuel terminal under the name Channel Infrastructure following the strategic review.

The review followed an unexpected and significant fall in refining margins due to the
build-up of refineries across Asia and ahead of a growth in demand, as well as a drop in fuel sales across New Zealand during the lockdown early last year.

The change will mean the Marsden Point operation will no longer process crude oil, and all of the country's fuel and petrol supplies will be imported from Asia. The number of employees at the site is expected to drop from 300 to 60 over the next couple of years, with hundreds of contracting jobs also likely to be cut.

Refining NZ said it is now focused on concluding the negotiation of terminal services agreements with all customers and completing the engineering and design and detailed implementation planning for the conversion, ahead of a final investment decision by the Refining NZ Board which is due around the end of September. This would enable conversion to occur by mid-2022.

Refining NZ CEO, Naomi James said it is pleasing to now have the in-principle agreement of all three of its customers.

''This provides added certainty regarding the final terms for a potential import terminal, as well as the expected timing for a Final Investment Decision and ultimate conversion.

"This change won't impact most New Zealanders, however it will have a huge impact on our people, and our community, so alongside finalising our plans for the terminal, I am focused on investigating a number of site repurposing opportunities for Marsden Point. Working with our community, we are looking to see what else our consented, heavy-industrial site, may be able to do to support New Zealand's transition to a low-carbon future."

Jones said Channel Infrastructure will be the country's leading independent fuel infrastructure company. The company will utilise the deep-water harbour and jetty infrastructure of Marsden Pt to import refined fuel, owned by its customers.

''This will replace the crude oil that our customers import today for refining.''

Fuel would be stored at the Marsden Pt site in existing tanks at what would be the largest fuel terminal in New Zealand, with 180 million litres of shared capacity, as well as capacity to provide additional storage if required.

Fuel from Marsden Pt would be distributed on behalf of Channel Infrastructure's customers primarily to the Auckland and Northland markets, which make up around 40 per cent of New Zealand fuel demand, through the 170-kilometre Refinery to Auckland Pipeline (the RAP) and the truck loading facility (the TLF) located adjacent to the Marsden Pt site.

The Social Credit Party has launched an online petition on www.change.org, calling on the Government to declare the refinery a nationally strategic asset and to compulsorily buy all the shares from private owners using money created by the Reserve Bank. The petition has already received more than 10,000 signatures.