Business

Marsden Point oil refinery cutting production amid lower demand

The Marsden Point oil refinery is halving production for the next three months at least because of lower fuel demand.

Refining New Zealand said it was changing operations to produce less fuel with fewer staff, by closing down parts of the refinery and concentrating on the production of key fuels.

"As an essential service, our immediate focus through this period of uncertainty is to continue to operate the refinery and the Refinery to Auckland Pipeline (RAP) safely, to meet customers' reduced need for high quality transport fuels, and to contribute to the security of New Zealand fuel supply," managing director Paul Zealand said.

He said the reduced operations would mean about 200 staff on site, which is a third of the normal workforce.

Other staff would be working remotely to ensure the necessary back room operations continued.

Zealand said supplies of crude oil from overseas have not been disrupted and are arriving as scheduled, but it was likely that with reduced demand its stocks of various products would rise.

The company was also stopping all construction work at the refinery but would maintain all projects necessary for the refinery's safe running.

Refining NZ has been through rough trading in recent months because of a slump in processing margins, which have hit its earnings. The big three fuel retailers - BP, Z Energy, and Mobil - have been required to pay a guaranteed minimum processing fee.

Zealand said the company had just renegotiated funding lines with its banks to ensure it was adequately financed during the curent uncertainty.

"Taking these actions now means that the company is well positioned to withstand an extended period of low demand as a result of Covid-19."

He said by cutting back on non-essential spending the refinery was "living within our means".

This article was originally published on RNZ and re-published with permission.

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