21 Aug 2019

Oil refinery operator falls deeper into red

11:26 am on 21 August 2019

High electricity prices and weaker oil refining margins have seen the owner of the Marsden Point refinery increase its debt.

Marsden Point oil refinery

Refining New Zealand has reported a net loss for the first half of the year of $3.5m. Photo: 123rf.com

Refining New Zealand, itself part-owned by the major fuel companies BP, Mobil and Z Energy, reported a net loss for the first half of the year of $3.5m, a 24 percent greater loss than the previous year.

The company's chief executive Mike Fuge said its processing units were running reliably during the period, but a combination of factors meant the refinery could not make the most of the good operational performance.

"Our performance was negatively impacted by high electricity prices in the market, weakness of refining margins since the beginning of the year driven by low gasoline prices, and reduced access to natural gas because of on-going maintenance on the Pohukura gas field," Mr Fuge said.

Revenue climbed 16 percent with income from its processing fee higher compared to the previous year.

Gross refinery margins were down slightly on the same period in 2018 on the back of higher than forecast gasoline exports from China into the Asia Pacific region.

Mr Fuge said the outlook for margins was more positive.

"With the strengthening of refining margins in July there are encouraging signs for the second half of the year and, with an improving exchange rate in our favour, we expect our performance to track in line with the 2019 profit matrix, despite the impact of higher electricity prices on our business."

The company was pleased to see an improved safety performance, with no injuries recorded.

It had noted the Commerce Commission's findings on its market study of the fuel sector Tuesday, and indicated it would be making a submission on the draft report.

Shareholders would be paid an interim dividend of 2 cents per share.

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