Concern in Northland over potential Marsden Point downsize

The company said it will focus on fuel supply into Northland and Auckland.
The company said it will focus on fuel supply into Northland and Auckland. Photo credit: File / Getty

By Andrew McRae of RNZ

Northland is nervously awaiting a decision on whether the Marsden Point Refinery will be downsized to become a fuel import terminal only.

Refining NZ, which owns the plant, said it is one option it's seriously considering as it redefines itself in the wake of lower fuel prices and cheap supply from Asia which has reduced refining margins.

The company said it is trying to simplify its operations in order to keep the business viable.

The refinery, which was opened in 1964, employs about 400 people and many contractors. If the plant is downsized, a number of well-paid workers would likely leave the region.

Northland Chamber of Commerce chief executive Steve Smith said any reduction at the refinery would have a devastating effect on the region.

''Because of the sheer volume of whānau that are supported by people working there, it is a huge concern absolutely.''

He said turning it into just a fuel importing terminal is the last thing the region wants or needs.

''If you are only operating a tank-farm, which is affectively what that option is, I can't imagine that the levels of employment would remain anywhere near they are.''

Whangārei Mayor Sheryl Mai said Marsden Point is a significant contributor to the local economy and cutbacks would be felt.

''Any reduction in the through put for that business has an impact on our overall GDP for the district and obviously for the nation, so any reduction in that is not welcomed.''

Refining NZ said Marsden Point is not paying its way and the business model needs to change.

But its chief executive Naomi James said it is premature to conclude that replacing refining oil, with imported refined fuel will happen.

''At this stage what we are saying is we are going to move into detailed planning to simplify the refinery to make it as competitive as we can to extend operations into 2021 and in parallel with that exploring that as a future option.''

She said turning the plant into a import terminal would mean reducing the size of the business.

''It's a different operation absolutely. A lot of the facilities we have today we would continue to use but there are other facilities that we would not continue to use.''

The three big petrol companies, Mobil, Z Energy and BP are the major shareholders in Refining NZ and also its biggest customers..

Z Energy said turning Marsden Point into an import terminal is the best outcome for the refinery and the country.

Chief executive Mike Bennetts said the refinery is at a disadvantage due to its small size.

''It's a long, long way from markets and it's competing against refineries that are larger and frankly have lower operating costs, particularly around energy and labour, so it's really, really hard for something to compete against a piece of kit elsewhere in the world that is ten times the size and obviously has much lower unit costs.''

About 30 percent of transport fuel is already imported into New Zealand as refined and ready to go straight into a vehicle.

Gull gets most of its fuel this way and has done so for over 20 years.

Gull's general manager Dave Bodger said it allows them to pick and chose where they get their fuel and for a good price.

''You need fuel to New Zealand specification, you want certain characteristics, you want a good supply chain, there is all sorts of things, but there is more choice than just through one refinery that you may have an interest in in ramping the revenue on as well.''

The final decision on the future look of the refinery will be made later this year.