Monday 23rd April 2018
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New Zealand Refining, operator of the country's only oil refinery, says its 2017 oil pipeline failure knocked net profit by $8.2 million last year.
At the company's annual meeting in Auckland this afternoon, chief executive Sjoerd Post said the failure of the pipeline between the plant at Marsden Point and Auckland in September had a net impact on profit of $8.2 million, according to a presentation published to the NZX.
Post, who will leave the Marsden Point refinery operator at the end of July after five years in the role, said throughputs are higher today than before the incident. In February, the Northland Regional Council said it wouldn't prosecute NZ Refining for the incident, as external expert studies concluded the pipeline was well run in lead-up to the incident and the leak was due to an external force.
At the end of February, the company declared a 66 percent increase in net profit for the year to Dec. 31 to $78.5 million, driven by historically high average refining margins of US$8.02 per barrel of oil processed.
Those accounts showed the refinery spent $6 million repairing the pipeline, which failed on farmland near Ruakaka, close to the Whangarei, and lost $6.3 million in processing fees and a further $2 million in distribution fees attributable to the disruption to supply. Insurers had paid out $2.9 million already on the refinery's policy covering environmental damage.
Post said the company sees itself "as part of the solution on a pathway to 2050 carbon neutrality for the country", and its $365 million Te Mahi Hou expansion project at the Marsden Point refinery, completed in December 2015, was equivalent to "taking 60,000 Corollas off the road or the NZ public buying $4.8 billion worth of Tesla’s model 3."
In the next six years, "demand for petroleum products in Asia Pacific is expected to continue to outpace capacity growth and we are therefore cautiously optimistic about margins," he said.
Post said the company is well set up for its total refinery shutdown this year. The shutdown is running in stages from April 20 to June 8, with 39 days where the entire refinery is closed. NZ Refining is spending $85 million on the shutdown and it will have a financial impact of $30 million.
"This is the major event of our year, its size is a once in every 15 years occurrence," Post said. "For example, if you have not been able to get hold of scaffold recently, it is because we have 2,000 tonnes of it on site."
"We continue with a strong growth agenda in 2018 including small optimisation projects, working on pipeline capacity, jet import and sulphur prilling," Post said.
Chair Simon Allen said the board was pleased that Post would remain at NZ Refining for the next few months to see through critical work including the 2018 planned maintenance shutdown and the government inquiry into the pipeline incident.
At the annual meeting, shareholders also voted to re-elect directors Vanessa Stoddart and Mark Tume, who had both retired by rotation, and to elect Deborah Boffa and Lindis Jones to the board.
The company's shares recently traded at $2.36, up 1.3 percent today and 1.7 percent this year.
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