Marsden Pt hits pay dirt

By CHRIS DANIELS energy writer

A global squeeze on oil refineries is producing better profits for the owners of Marsden Pt, the New Zealand Refining Company.

Margins at the refinery - listed on the NZX but owned mostly by the big oil companies - have been steadily increasing over recent years.

It made a profit of $36.9 million in the past year, up $1.5 million from the year before. Its latest stock exchange update shows it is earning a margin of US$4.83 ($7.74) on each of the 6,476,000 barrels of oil refined at Marsden Pt in March and April. This compares with a margin of US$3.49 for the same period last year.

Company chief executive Thomas Zengerly said this upward trend reflected a better business environment for refiners seen internationally.

Demand on the world's oil refineries had increased significantly in recent years, particularly in the US, but also in developing countries such as China and India.

Refineries took a long time to build, said Zengerly, and in some parts of the world, such as the US, it had been decades since any new refinery had been commissioned.

High world oil prices had little impact on operations at Marsden Pt, said Zengerly, which processed oil owned by others.

"As long as the physical supply is there, we are not impacted by high oil prices.

"We only rent out our processing and distribution facilities.

"We never own the oil, it always remains in the ownership of the oil companies."

Refining margins charged by the company were determined by prices set in the Singapore oil market.

"We don't set prices, we just follow the market,"said Zengerly.

He said any need for a new refinery in New Zealand was some way off - at least 10 to 15 years, if not longer.

It was always cheaper to expand existing refineries, which already had vital infrastructure such as port facilities in place.

The proportion of New Zealand's fuel refined at Marsden Pt has been steadily declining in recent years, with its provision of diesel, gasoline and jet fuel expected to drop below 70 per cent in the next few years.

It has launched a "debottlenecking study" which it hopes will allow it to smooth out the refining process, allowing it to process 20 per cent more fuel every year.

NZ Refining is largely owned by five major shareholders: BP, 23 per cent; Mobil, 19.2 per cent; Shell, 17.1 per cent; and Canadian investment company Emerald Capital Holdings, 14.3 per cent. Caltex owns a further 12.7 per cent.