Refinery suffers earnings setback

By CHRIS DANIELS

Marsden Point oil refinery operator New Zealand Refining saw its earnings nearly halved last year, but its directors say the decline had been expected.

The company, which is mostly owned by the big oil companies, made an after-tax profit of $36.5 million in the December year, compared with $69.4 million previously.

Company chairman Ian Farrant said the board was pleased with the result, which despite being "significantly lower than the previous year's" was in line with expectations.

He said this was because 2000 had been such a spectacular year, due to a high US dollar and good margins.

"The refinery has continued to perform at world-class levels and has demonstrated an ability to compete with other refineries in the region."

Total operating revenue was down $118 million at $178.58 million.

A final dividend of 125c a share will be paid on March 28, making a total dividend of 175c a share. Last year's total was 250c a share.

The company said it incurred costs of $6.48 million from last year's "dirty diesel" episode when an additive called Dodiflow was put into diesel coming from the refinery.

This meant fuel filters became clogged during the winter, requiring many vehicle owners to have them replaced at their fuel supplier's expense.

That issue has not yet been resolved, said Mr Farrant.

Customers had made claims against the company for costs incurred because of the diesel, some of which had been accepted.

New Zealand Refining was seeking reimbursement of its costs in relation to the issue from "a supplier".

NZ Refining is largely owned by five major shareholders: BP, 23 per cent; Mobil, 19.2 per cent; Shell, 17.1 per cent; Canadian investment company Emerald Capital Holdings, 14.3 per cent. The smallest of the big four oil companies, Caltex, owns 12.7 per cent.