Marsden Point Refinery Expansion Now Due for 2010

Expansion of Marsden Point refinery production now planned for 2010 start up.

Chief executive Thomas Zengerly told the company’s annual meeting that the final investment evaluation of the ”Point Forward Project” was now planned for early 2007 and would have an estimated cost of about NZ$500-700 million.

Mr Zengerly said WorleyParsons had been appointed the international contractor and the company had recruited a project manager.

He said the drivers for the project were to produce profitable growth, to reduce dependence on imports of products and components and create increased availability of the plant.

The current business environment was seeing demand for oil continuing to increase and high crude prices at a time when refinery capacity expansion was lagging.

The components of the Marsden Point refinery expansion would be a crude distilling unit, the replacement of the 40 year old platformer by a larger, state of the art unit, and conversion of the existing platformer into an isomerisation unit.

In August last year, the $NZ186 million Future Fuels project was completed. The project focused on reducing levels of sulphur in diesel and benzene in petrol. After 7 months of operation, the project has brought $87 million of economic benefits to the refinery.

Chairman of New Zealand Refining Company, Ian Farrant recalled that at the previous year’s meeting he had told shareholders the 2004 financial result would be hard to beat.

He was delighted to say that last year’s profit was bettered by around 43% with a net profit after tax of $139.9 million.

Mr Farrant said the company’s success was not due to it being New Zealand’s only refinery. New Zealand is an open market where the company competed with every other refiner in the region to supply products to New Zealand.

He outlined some the reasons for the company’s success;

The geography meant there were long supply lines and the deep water port assisted economies of scale.

The refinery’s configuration gave it the ability to process a wide variety of both sweet and sour crude’s, with the hydrocracker a huge benefit in converting a much higher percentage of each barrel into fuel.

As a tolling operation; the refinery does not have the costs or risks of owning huge quantities of hydrocarbons. The fact that the refinery received a fee based on world market prices means it must remain world class to survive, he said.

Source: NZ Refining Co annual meeting speeches.