Vector doubles quantity of gas available to Marsden Point refinery

Friday 18th December 2015

Vector, the electricity and gas distribution firm, will double the quantity of natural gas available to the Marsden Point oil refinery in a new deal with New Zealand Refining.

The operator of the country's only oil refinery reached an agreement with Vector to access more than 5 petajoules of gas per year, which it will use as fuel for its processing units, it said in a statement. New Zealand Refining currently takes between 2 and 2.5 petajoules of gas per year.

The deal will see Vector spend about $25 million to upgrade compression capacity on the northern pipeline and the Marsden 1 delivery point, which is expected to begin in September 2016.

Refining NZ chief executive Sjoerd Post said more gas provides further opportunity to grow the refining business.

"Natural gas is a cost effective and clean energy source that gives us greater flexibility in the crudes selected for processing," Post said.

When available, the increased access is expected to lift the gross refinery margin (GRM) by at least 15 US cents per barrel, rising to 20-25 US cents per barrel at a crude price of US$60–70 per barrel. The refinery's GRM was running at US$8.86 a barrel in the year through October.

Vector CEO Simon Mackenzie said the upgrade was positive for both businesses.

NZ Refining shares rose 0.3 percent to $3.62, while Vector shares gained 0.6 percent to $3.15.

BusinessDesk.co.nz

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