Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Z Energy saves $50 mln capex in refinery crude-matching deal

Z Energy saves $50 mln capex in refinery crude-matching deal

March 5 (BusinessDesk) – Z Energy will defer $50 million of capital expenditure on new storage facilities at Tauranga and Lyttelton by cutting a deal with BP and the operators of the Marsden Point oil refinery to coordinate the quality of crude oil the refinery processes.

While the country’s two smaller players, Mobil and Chevron, aren’t part of the arrangement, the Z and BP tie-up allows “more efficient use of Refining NZ (and) reduces Z’s procurement costs without committing capital,” said Z’s chief executive, Mike Bennetts, in a statement.

“Z has been investigating spending up to $50 million on building larger import terminals at Mount Maunganui and Lyttelton to lower the costs of refined fuel imports.

“While the consents for these new import terminals remain in place and represent a valuable option for Z, being able to secure cost reductions through more efficient operation of Refining NZ removes the need to commit that $50 million of capital,” he said.

Z shares rose 1.3 percent this morning to $3.78, while shares in New Zealand Refining, whose register is dominated by the four major oil companies, was up 0.6 percent in trading this morning, at $1.77, although the shares have fallen 28 percent in the last year.

NZ Refining last week announced a loss for the year to Dec. 31 of $5 million, as global over-supply of refining capacity and the strong New Zealand dollar squeezed refiners’ margins. The company also announced a $48 million equity-raising this week, involving a placement with institutional shareholders that slightly dilutes the holdings of BP, Z, Mobil and Chevron (operator of the Caltex brand), which did not participate.

The refinery’s chief executive, Sjoerd Post, said the plans would “with immediate effect” be “involved in the selection of crude to be processed for Z Energy and BP in return for a procurement cost reduction for selected fuel products produced for these customers as part of the existing processing agreement.”

“The new arrangement highlights the commercial benefits from running the refinery more efficiently with an optimal crude ‘diet’ and the change in customer expectations with the increasing availability of competitively priced products from Asia-Pacific refiners.”

The shift reflected the emergence of customers which have no ties to global owners, such as New Zealand-owned Z, which sees value in the refinery participating in the crude selection process, while other customers saw access to the local refinery as just one part of their overall regional supply chain management.

Z and BP were the two companies that voted in favour of the $365 million Te Mahi Hou upgrade project, currently under way. Mobil and Chevron opposed the move.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

By May 2018: Wider, Earlier Microbead Ban

The sale and manufacture of wash-off products containing plastic microbeads will be banned in New Zealand earlier than previously expected, Associate Environment Minister Scott Simpson announced today. More>>

ALSO:

Snail-ier Mail: NZ Post To Ditch FastPost

New Zealand Post customers will see a change to how they can send priority mail from 1 January 2018. The FastPost service will no longer be available from this date. More>>

ALSO:

Property Institute: English Backs Of Debt To Income Plan

Property Institute of New Zealand Chief Executive Ashley Church is applauding today’s decision, by Prime Minister Bill English, to take Debt-to-income ratios off the table as a tool available to the Reserve Bank. More>>

ALSO:

Divesting: NZ Super Fund Shifts Passive Equities To Low-Carbon

The NZ$35 billion NZ Super Fund’s NZ$14 billion global passive equity portfolio, 40% of the overall Fund, is now low-carbon, the Guardians of New Zealand Superannuation announced today. More>>

ALSO:

Split Decision - Appeal Planned: EPA Allows Taranaki Bight Seabed Mine

The Decision-making Committee, appointed by the Board of the Environmental Protection Authority to decide a marine consent application by Trans-Tasman Resources Ltd, has granted consent, subject to conditions, for the company to mine iron sands off the South Taranaki Bight. More>>

ALSO: