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Z chases cheaper processing in new refinery deal

Z chases cheaper processing in new refinery procurement deal with Mobil

By Paul McBeth

Feb. 19 (BusinessDesk) - Z Energy says it wants to cut supply chain costs with a new refinery optimisation and procurement deal with New Zealand Refining and Mobil New Zealand, replacing an existing arrangement with BP.

Wellington-based Z says the deal will help the Marsden Point refinery operate at a higher efficiency level using joint procurement of the most suitable crude oil, and kicks off one of the transport fuel company's 'Strategy 3.0' projects to improve earnings from terminals, logistics and industry agreements by $4 million to $5 million from the 2019 financial year. The first crude imports under the arrangement will be processed in July.

"This project enables improved processing efficiency at the refinery which all parties to the agreement benefit from," David Binnie, general manager of supply and distribution, said in a statement. "With almost four years of experience in the operation of optimisation arrangements and now better understanding their potential, Z has taken the decision to change its optimisation and procurement partner."

Last month Z cut its annual earnings guidance by about $20 million due to an outage on the refinery-to-Auckland pipeline in the December quarter and more expensive crude oil, predicting replacement cost earnings before interest, tax, depreciation, amortisation and fair value adjustments of between $430 million and $455 million in the year ending March 31.

Z shares rose 0.1 percent to $7.04 while NZ Refining shares gained 1.2 percent to $2.45.


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