Energy Business: Testing Times For Marsden Point Refinery
April 13th, 2010
NZ Refining Co, CEO Ken Rivers says in his 35 years in the oil industry he has not experienced such testing times for the refining sector as in the past 12 months. “In addition to the financial challenges of 2009, we had the prospect of major shareholder and customer changes, two tsunamis, a global flu pandemic, and a regional power failure, while successfully completing the Point Forward project, and two major planned turnarounds.”
Those testing times took a toll on NZ Refining’s financial performance, with net profit falling from $124m to just $23m. At the beginning of the year, the company’s refining margin was $US12 a barrel, but by the end of the year it had slumped to $US1 a barrel, exacerbated by the volatile US-to-NZ exchange rate. Despite the squeeze on margins, the company had some successes to report. Chairman David Jackson says in commissioning the $191m Point Forward expansion on time and within 7% of the project budget, the company has achieved a “fantastic result,” given the technical complexities and pressure on costs. The project has grown the business by around 15% and ensures the company is well positioned to meet NZ’s transport fuel demands for the next 20 to 30 years.
“We also built a $10m third jetty to provide a marine fuel oil facility to the Auckland commercial and cruise liner market. This is a new solution for Auckland as the redevelopment of Wynyard Wharf progresses. Our refinery is already leading in terms of reliability and we underpin our world-class status through continued investment. In 2010 we will spend $30m on regenerating the platformer catalysst and replacing catalyst in the hydrocracker. To keep the catalyst operating effectively we need to regenerate it every 18 months or, in the case of the hydrocracker, replace it every 3 or 4 years.”
Jackson says he does not expect the divestment by Shell of its stake in NZ Refining will make much change to the fundamentals of the business.
Rivers says predicting when fortunes will return to the refining sector is “fraught with difficulty. But by maintaining world-class reliability, continuing to delight customers, focusing on adding value to our business and improving our financial fitness we will survive the storm and come out stronger.”
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