The operator of New Zealand's sole refinery, the 135,000 b/d Marsden Point, is in dispute with its largest shareholder ExxonMobil over their processing fee agreement.
The discord between the two comes ahead of operator Refining NZ's plan to unveil a long-term plan next month that may see a possible conversion of the refinery into an oil product import terminal.
Refining NZ processes crude into gasoline, diesel, jet fuel and other refined products for a tolling fee, which it receives from three wholesalers — BP, ExxonMobil and New Zealand downstream firm Z Energy. Z Energy bought Chevron's New Zealand assets in 2016.
Under the terms of the processing fee agreement, customers wear the losses associated with periods of low margins and benefit when margins are high, Refining NZ said.
Refining NZ said earlier this week that the gross refiner margin was -$4.18/bl in July-August, reflecting weak margins and low production during the period and the fuel and loss impact of the shutdown and restart of the refinery. The refinery was shut down for six weeks during July-August to help rebalance national stocks because of the impact of the Covid-19 outbreak on New Zealand's fuel demand.
Discussions are continuing with Refining NZ's other customers in relation to the potential future staged transition to an import terminal, the firm said. Z Energy supports the option of converting the refinery into an import facility. The dispute between ExxonMobil and Refining NZ over concerns that the US major may be incurring losses from its investment in the New Zealand downstream sector for the foreseeable future indicate that ExxonMobil will welcome any plan to stem the losses from low or negative refiner margins.
The Marsden plant has largely operated under a processing fee arrangement since it was commissioned in 1964, which means Refining NZ does not own any of the feedstock it uses to make the oil products. Under the processing agreement, Refining NZ keeps 70pc of the margin from each barrel it processes, while customers receive the remaining 30pc of the margin.
Refining NZ processed 1.77mn bl (29,000 b/d) in July-August compared with 7.42mn bl in the same period a year earlier. It has processed 17.2mn bl over January-August compared with 42.69mn bl during the same period in 2019.
