New Zealand fuels retailer Z Energy wants the country's 135,000 b/d Marsden Point refinery converted to a fuel import terminal with it in talks with fellow owners about the transition.
Z Energy owns 15.4pc of Refining NZ, which owns and operates Marsden Point and is considering the option of converting to an import terminal. Z Energy bought Chevron's New Zealand assets in 2016.
"Refining NZ's future is as an import terminal and distribution hub for refined fuels rather than as a refiner of crude," Z Energy said. If the country's sole refinery is no longer producing jet fuel and marine fuel, the firm will no longer be forced to sell fuel oil at a loss, it said. Jet fuel will also be priced on an import basis, rather than as a fuel that must be produced and sold on the buyers' terms.
"The outlook for refining margins remains poor, particularly for a very small, geographically isolated refinery," Z Energy said.
Refining margins since December 2019 have continued to be at levels insufficient to cover the operational cost of domestic refining, the company said, with its exposure to refining being a drag on profits. "This is not sustainable given the medium-term outlook for refining margins."
This has required Z Energy to make a NZ$19mn of fee floor payments to Refining NZ leading to a NZ$14mn refining margin loss for the period, after the NZ$5mn received for refining activity was used to pay for the fee floor payments.
Refining NZ said in September that it was in dispute with its largest shareholder ExxonMobil over their processing fee agreement. Refining NZ processes crude into gasoline, diesel, jet fuel and other refined products for a third-party processing fee, which it receives from three wholesalers — BP, ExxonMobil and Z Energy.
Moving the firm's fuel storage terminals to a commercial business operational model will allow Z Energy to offer new products such as biofuels and fuel additives that cut greenhouse gas emissions and contribute to New Zealand's climate change objectives, the company said.
Z Energy processed 24,000 b/d during April-September. Its guidance for the 2020-21 fiscal year to 31 March and gross refinery margins remain at $3/bl.
