Outing Z Energy chief executive Mike Bennetts. Photo / NZ Herald
For outgoing chief executive Mike Bennetts and his replacement, Lindis Jones, the irony in running Z Energy – the country’s biggest fossil fuel retailer – is not lost.
For them, decarbonising Z means selling less of what has been its lifeblood – petrol and diesel.
Bennetts bowed out of the top job this month while Jones took over the reins as of March 6.
Both have a long history in the oil business – Bennetts joined BP in 1983 as a trainee salesman and went on to spend 25 years with the multinational here and abroad.
Jones has a similar background – joining Shell in 1993 as an industrial chemist also with offshore experience, before joining Z.
He has been with Z since 2010, having held several different executive roles including, general manager corporate and chief financial officer.
He was also responsible for the integration of the Chevron New Zealand business in 2015/16 and oversaw Ampol’s acquisition of Z last year.
Bennetts’ tenure officially ends on March 31 but he has no plans to retire.
“I would like to have one directorship at the big end of town, with a large progressive corporate.
“Other than that, I plan to do executive coaching and consulting and to make a contribution.”
Z Energy was born when Infratil and the NZ Superannuation Fund bought Shell’s New Zealand fuel distribution assets for $696 million in 2010.
By 2013 the stock was listed on the NZX and by 2016 its share price had more than doubled - peaking at $8.87.
Last May, Z delisted from the NZX and the company is now owned by Ampol, Australia’s biggest fuel retailer, which paid $3.80 a share.
Z was taken over by Ampol around the same time as Refining NZ transitioned away from oil refining to become an oil terminal under its new name, Channel Infrastructure.
Bennetts said the change of ownership at Z had gone well.
“What’s predictable in these circumstances is that employee engagement goes down, customer service goes down, and here is a whole lot of internal distraction as the bigger company wrestles with the smaller company.
“None of that has shown up. Employee engagement has remained high, customer service is as good as it ever was, and we have actually benefited from Ampol’s ownership.
“Being part of a bigger supply chain has helped a lot.”
Likewise, he said the Refining NZ-Channel transformation, which has been in place for a year, had served Z Energy’s purposes well.
Z had moved away from some long-standing industry arrangements.
“We are on our own, independently and commercially interacting with one another versus the sometimes referred to as the ‘club’ that was otherwise operating.
“It’s gone well and we have kept costs down.”
The importation of a bad batch of aviation fuel set the cat among the pigeons in the lead-up to Christmas last year.
Bennetts said that “wobble” in jet fuel supply was the first such issue in his 13 years at Z “and which would have been an issue if we had the refinery anyway”.
Z Energy owns of 12.8 per cent of Channel (Jones is a director) and has 44 per cent market share - making it the biggest player by quite some margin.
Under Ampol’s ownership, has there been any pushback on the station forecourt over the once proudly New Zealand-owned Z Energy?
“Not really because many people don’t realise that we are owned by the Australians because the Z is still for New Zealand,” Bennetts says.
“All the big decisions get made in this country.
“We will continue to do the work around our brand and we are increasingly moving to transition to low carbon.”
On that score, Bennetts says being part of the Ampol envelope allowed the company to learn more about the pathway to decarbonisation.
Bennetts talks about the energy “trilemma” facing New Zealand.
“It’s the affordability of energy, the security of energy, and the sustainability of energy.
“Clearly affordability is a big thing for all New Zealanders right now,” he said.
The prices being paid by households and businesses are driven mostly by global activity.
Bennetts says New Zealand’s energy security has improved under the new oil terminal arrangement.
He says there is now a more diverse range of products coming into the country than there ever was before.
Two-and-a-half fuel tankers now visit New Zealand a week.
“When it comes to sustainability, that’s the big issue that goes clearly to the impacts that our products have on climate change, and I just don’t think New Zealand has made enough progress in that area,” he said.
Z started addressing the issue of low-carbon energy sustainability as far back as 2010.
“Here I am 13 years later and there has been little progress.
“I’m left with the frustration that we have not transitioned as quickly as we could have, or needed to.”
Jones said Z Energy sees itself as an energy company - not specifically a fossil fuel company.
“That’s always been the mindset.
“We don’t drill for oil and we have no bias as to what energy we sell.
“It will be led by customers and we will respond to what customers need.
“There are some clear opportunities and a growing conviction about using electricity in decarbonising the light vehicle fleet,” Jones says.
“That’s an absolute no-brainer for New Zealand.”
“Some say decarbonising transport will be hard.
“Pockets of it will be, but for the light vehicle fleet - among all the choices that we have – it is the most straightforward one.”
Z Energy, which also owns power company Flick Energy, aims to have 40 charging sites up and running by the end of the year.
Individuals have a number of choices when it comes to buying an EV.
“But when you get it home, you need a charging solution – preferably one that talks to the car, and to the national power grid.
“Our role is how do we make those choices easier for customers to – ironically – transition from our core business,” Jones says.
“The sustainability of this firm in the future will depend on how well we make the transition easier for our customers,” he says.
“No one would thank us if we didn’t pay attention to, and invest a lot in, the delivery of fossil fuels – the existing energy source – safely and reliably.
“We’ve spent over the last few years $80m-$100m on maintaining and investing in existing fuel infrastructure. No one is going to thank us if we walk away from that.
“So we have to do that well, for all sorts of reasons, in particular, because of the trust of New Zealand and New Zealanders.
“That is the challenge that New Zealand faces more broadly, but shows up acutely in this chair,” Jones, in reference to his new role, says.
He says once Z has its 40 installations up and running, the company will have a better idea about what’s best for the customer.
Much will come down to the extent that Z will install “extremely hyperactive’ chargers versus the low-density chargers.
Then there is the issue of dealing with customers while they wait for their vehicles to be charged.
“A significant part of our business is in retail, so that’s an opportunity to do that well for the customers when they recharge their vehicles.”
The experience in Norway and the West Coast of America showed that the companies that paid the attention to what the customer needs had been the most successful.
Z Energy’s studies have shown about 10 per cent of the vehicle fleet will be electric by 2030 and that by 2035, petrol volumes will be down by 35 per cent (from a 2020 baseline).
In the meantime, Z still needs to keep the pumps going.
The council has also been served with judicial review proceedings.