Refining NZ starts import terminal conversion design

The operator of New Zealand's 135,000 b/d Marsden Point refinery said it has started design work on its conversion to an oil product import terminal, including work on the costs and timing, as it talks with customers such as ExxonMobil.

Front end engineering and design (FEED) has now started to further develop and refine the import terminal conversion plans, Refining NZ said. The firm has yet to make a final decision on closing the refinery for the conversion, which was first proposed in April when it unveiled its strategic review.

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.

ExxonMobil has paused its dispute over the processing fee agreement between the two firms, Refining NZ said.

In September the refinery restarted after a six-week shutdown to help rebalance stocks across the country due to the Covid-19 impacts on New Zealand fuel demand, Refining NZ said. All processing units have continued to operate at reduced rates.

Global refining margins remained weak during the September/October period, with product demand reduced due to ongoing Covid-19 impacts. In response to weak margins, refiners globally have lowered runs, brought forward maintenance plans and implemented some temporary or permanent closures. Although global oil demand recovered considerably from May to September, the recovery in demand slowed in October due to a resurgence of Covid-19 infections globally, it said.

Refining NZ's September/October uplift over the Singapore Dubai complex margin was $2.79/bl, it said. The Singapore Dubai complex margin for the September/October period was down at -$1.64/bl.

Processing fee revenue was NZ$23.3mn ($16.13mn), including NZ$15.8mn of fee floor payments by customers. The gross refining margin (GRM) for Marsden Point for the two months was $1.15/bl reflecting the low global refining margins and reduced refinery throughput.

By Kevin Morrison