New Zealand's sole refinery could be converted into an import terminal for oil products by 2022 as part of plans for a larger energy hub at the site, including an LNG terminal and battery storage site, operator Refining NZ said.
Refining NZ has made progress on plans for the conversion of its 135,000 b/d Marsden Point refinery although no final decision has been made, chief executive Naomi James said today. The company said last year it was considering halting refinery operations because of low margins and regional oversupply.
The import terminal under consideration would come on line by 2022 with annual capacity of 3bn litres or around 18.9mn bl, Refining NZ said. This is equivalent to about 50,000 b/d, or less than 40pc of Marsden Point's refining capacity. It would supply fuel markets in Auckland and Northland in northernmost tip of New Zealand's North Island, which together account for 40pc of the country's fuel consumption.
Total one-off transition and conversion costs are estimated at around NZ$200mn ($144mn) over 4-5 years, excluding refinery demolition costs of around NZ$50mn-60mn. The refinery closure is also likely to lead to significant tax losses of an estimated NZ$350m.
If Marsden Point becomes an import terminal, the operating and capital costs of the facility would be around NZ$35mn-40mn, based on estimates of other recent refinery conversions in Australia and southeast Asia, said James, who inaugurated the review of refinery operations in April 2020, shortly after she became chief executive.
Initial engineering and detailed planning are underway to confirm cost and timing estimates for the conversion and optimal ways to close the refinery, James said, although she stressed that no final decision had been made. The company today reported a fall in margins and throughputs last year that helped send it to a loss of NZ$198mn.
Refining NZ is in talks with customers on an appropriate commercial framework and terms for the conversion to an import terminal. The company said today it had reached agreement with BP on key commercial terms and is continuing talks with ExxonMobil and New Zealand downstream firm Z Energy, after the companies raised objections over processing fees last year.
Refining NZ processes crude into gasoline, diesel, jet fuel and other refined products for a tolling fee, which it receives from the three companies. BP, ExxonMobil and Z Energy own a combined 43pc of Refining NZ.
The plans also include looking at opportunities to develop the Marsden Point site as a fuel and energy hub, with the potential to produce, store, handle, import and export products including biofuels, sustainable aviation fuel, hydrogen, LNG and electricity.
The proposed import terminal would need only around 20pc of the existing tank capacity and 35pc of usable land at Marsden Point, and would cut carbon emissions by 98pc, Refining NZ said.
The halt to Marsden Point's refinery operations would add to a string of shutdowns in Asia-Pacific. ExxonMobil last week said it would close its 90,000 b/d Altona refinery in Victoria, Australia later this year. BP has already pledged to shut its 146,000 b/d Kwinana refinery in Western Australia, leaving Australia with just two refineries that have not committed to remaining operational in the long-term.
