New Zealand prepares for shifts in bitumen supply

: Oil products
20/12/23

New Zealand has reviewed its bitumen specifications and is seeking recommendations on ensuring supply security as it prepares to become fully reliant on imports in 2021.

The Waka Kotahi New Zealand Transport Agency (NZTA) said it has reviewed the country's M01 bitumen grades specifications and is looking at a range of grades available for exports from other countries. It did not say whether it had made any changes to its grades.

New Zealand's previous M01-A specification standards included penetration grades 40/50, 60/70, 80/100, 130/150 and 180/200. The M01 standard for bitumen specifications was developed by the government a few years ago to meet road construction needs and put it in line with the grades produced by the local refiner.

But the country is poised for a major shift in bitumen supply after Refining NZ earlier this year decided to permanently halt bitumen production at its 135,000 b/d Marsden Point plant, New Zealand's sole refinery. The decision came following the negative impact of Covid-19 and other "commercial pressures" on refining margins.

Refining NZ produces 100,000-120,000 t/yr of bitumen, enough to meet about 70pc of New Zealand's estimated demand of 160,000-170,000 t/yr and leaving the country importing about 50,000 t/yr.

The NZTA also issued a Request for Information (RFI) on 21 December to "identify market players and ideas to help ensure future security of supply of quality bitumen at a fair market price and equitable access to bitumen". The tender is due to close on 26 February 2021.

The tender seeks feedback from industry participants across the supply chain in an effort to mitigate supply risks such as quality, costing and sourcing.

This exercise is also a way to identify potential strategic partners as New Zealand becomes fully reliant on imports from the next financial year that starts 1 July 2021.

There have already been initial discussions between industry participants and the NZTA, with further steps expected in 2021.

"New Zealand has sufficient bitumen for the road surfacing works for the 2020/2021 financial year. However, it is important to ensure a fit-for-purpose new supply mechanism emerges for reliable, long-term outcomes," NZTA added.

By Mahua Chakravarty

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