$150m refit to to clean up fuel

New Zealand Refining Company faces a bill of up to $150 million under new Government fuel rules.

The new regulations, announced this week by associate Energy Minister Paul Swain, will be phased in over the next three years. They will require diesel to be much cleaner than it is now.

Lower sulphur and benzene limits will mean that New Zealand Refining has to pay to refit its Marsden Point oil refinery to remove more of the chemicals from petrol and diesel.

Chief executive Alan Davey said the investment in the new plant and equipment was needed if it wanted to say in the refining business.

"The company accepts the need for a phased transition to more stringent fuel specifications," he said.

"The future fuel specifications will improve local air quality by reducing the emissions of sulphur and nitrogen oxides, hydrocarbon vapour, benzene and particulate matter."

The new specifications will also mean that more advanced engines can be used in New Zealand.