The operator of New Zealand's sole refinery, the 135,000 b/d Marsden Point, is talking to customers about converting the plant into an import terminal.
Refining NZ is evaluating the possible staged transition to an import terminal in consultation with its customers and the New Zealand government, chief executive Naomi James said today.
"Simplification of our refinery creates the time and optionality to continue refining operations in the near-term while we assess the potential option to transition to an import terminal in the future," James said.
The other option under consideration for the refinery is an improvement to its existing business model. The firm outlined four possible options when it announced a strategic review in April, but narrowed this to two in June. The strategic review is scheduled to be completed by the end of next month.
Refining NZ plans to return Marsden Point to low production levels this month after a six-week shutdown in an effort to balance the fuel market in New Zealand, where demand has been hit by Covid-19 travel restrictions.
Gasoline and diesel demand have largely recovered to pre-coronavirus levels but jet fuel demand remains weak, at around 40pc below year-earlier levels, and is expected to remain low for the rest of this year, Refining NZ said.
All major maintenance was suspended as part of the company's response to Covid-19. A turnaround at the refinery's main crude distillation unit and gasoline-producing unit is scheduled for March 2021.
Refining NZ expects refinery margins to remain volatile in the near term. Singapore refinery margins are likely to improve in the second half, but remain weak compared with historic levels, it said.
The firm booked a pre-tax impairment on its assets of NZ$218.9mn ($158.1mn) in its January-June 2020 financial results because of the revised refining margin assumptions, which reflect excess refining capacity in Asia-Pacific and the effects of the Covid-19 pandemic on transport fuel demand, particularly jet fuel.
The slump in oil demand has left the region grappling with overcapacity and prompted Shell to announce the permanent closure of its 110,000 b/d Tabangao refinery in the Philippines last week.
| Refining NZ financial results Jan-June 2020 | |||
| Jan-June 2020 | Jan-June 2019 | Change % | |
| Refinery throughout (b/d) | 85,000.0 | 118,000.0 | -28.0 |
| Refinery margin ($/bl) | 1.82 | 5.31 | -65.7 |
| Revenue (refinery) NZ$mn | 96.5 | 146.1 | -34.0 |
| Net loss after tax (NZ$mn) | 186.3 | 3.5 | n/a |
| Source: Refining NZ | |||
