The future of the country's only oil refinery is under review.
Refining New Zealand said the Marsden Point refinery is being pressured by a slump in refining margins, which provide much of its income, and an oversupply of fuel products in the region.
Chairman Simon Allen said the review would look at the fundamentals of the business, its role in the country's fuel supply chain, and longer term issues such as the move to a low carbon economy.
"The Strategic Review will look at opportunities to improve the competitiveness of refining operations and options to separate the refining and infrastructure assets or convert to a fuel
import business model," Allen said.
"The review will also look at the capital structure required for the preferred option to maximise value for shareholders."
The refinery has moved to halve production through to the end of August, and has put all non-essential spending on hold.
A presentation on the rationale for and content of the review said the refinery was not paying its way.
"Currently, our view is that the refinery is not able to earn its cost of capital through the cycle due to the changes in the underlying cost of operations and regional competitive conditions combined with the structure of the processing agreements."
It said the company earned a 1 percent return on its capital in 2019, less than a third of the year before and the lowest since 2013/14.
"A fundamental change in the competitiveness of refining operations and the economics of Refining NZ's business model is required."
It said cheap new supply was coming onto regional markets from China, Korea, Singapore and India, and these larger producers were crushing refining margins.
The Marsden Point refinery is largely owned by the three major fuel companies - Z Energy, BP, and Mobil - and in the past has earned the bulk of its revenue from the margins in processing crude oil for them for the local market.
However, margins have fallen so far that the fuel retailers must now pay a guaranteed fee to the refinery.
The refinery was upgraded and expanded in 2015 in a $365m project.
Among future business options suggested in the presentation were manufacturing bio-fuels, hydrogen as a fuel, and complete the planned solar farm on adjacent land, which has been suspended.
It also suggested that it separate the refining operations out into a separate entity, and put its storage and port facilities, the fuel pipeline to Auckland, and other non-refined assets into another.
"We are considering all available options to create value for shareholders and support secure, competitive fuel supply to New Zealand, now and into a lower carbon future," the presentation said.
An update on the review would be given in June.
The company's shares rose more than 9 percent on news of the review. They have fallen 50 percent so far this year.