Government to investigate reopening Marsden Point oil refinery

The Government will investigate kick-starting the now-closed Marsden Point oil refinery. Photo / NZME

The possibility of reopening Marsden Point oil refinery will be investigated, although the chances of the Whangārei refinery being fired up again are still looking slim.

The Coalition Government has committed to investigate the reopening, with more details of the inquiry being released by Resources Minister Shane Jones later this year.

The privately owned refinery was decommissioned in 2022 to become an import-only fuel terminal under the name Channel Infrastructure.

The then-Labour Government was reassured New Zealand’s fuel security would not be put at risk, with oil companies saying resilience would be enhanced as the country would be less reliant on a single refinery.

But New Zealand First wanted the new Government to commit to reopening the refinery as a strategic national asset, gathering 3000 signatures on a petition after Cyclone Gabrielle.

“Capacity to refine fuel was a key feature of our campaign,” said Jones, who is also a Northland-based New Zealand First MP.

The coalition ended up agreeing to studying New Zealand’s fuel security requirements, establishing a fuel security plan and investigating the refinery reopening.

Jones said New Zealand’s resilience is a key motivator behind the push to reopen Marsden Point.

“We’re concerned about the ongoing problems pertaining to our road-sealing materials, our quality of jet fuel, as well as fuel.”

But Jones admitted the refinery was unable to refine New Zealand crude. Only about 2 per cent of crude came from New Zealand and the rest was imported, mostly from the Middle East.

Jones said the first issue was for New Zealand to ensure it has enough fuel reserves to weather a crisis.

While there are places to store extra fuel, a point of contention is the industry does not want to shoulder the cost of having extra fuel on hand, he said.

NZ First MP Shane Jones says since the refinery closed in 2022, there have been quality issues with bitumen and jet fuel, and worries about fuel security. Photo / NZME

“There is scope for the oil companies to be required to increase how much fuel they store in New Zealand, as part of a licence to operate in this country.”

Channel Infrastructure said it is committed to working with the Government to ensure supply chain resilience and welcomed the focus on enhancing fuel security.

“As the largest fuels import terminal in New Zealand, with an additional 400 million litres of unused storage tank capacity, we believe we have a key role to play in providing further onshore fuels storage where required, which is good for New Zealand,” said chief executive Rob Buchanan.

But reopening the refinery is a different story, costing billions and requiring a highly skilled workforce that have moved onto new opportunities, he said.

Channel Infrastructure chief executive Rob Buchanan says no part of the old refinery can be restarted, with reopening costing billions. Photo / NZME

“The refinery is now fully decommissioned and, while we haven’t undertaken formal costings, we would expect the cost to recommence refinery operations at Marsden Point would be in the order of billions of dollars, and take a number of years ... There is no part of the former refinery that can be restarted.”

Channel Infrastructure now has long-term contracts in place for providing import terminal services and is focused on alternative options for its site, including supporting New Zealand’s decarbonisation, Buchanan said.

Jones said the investigation will look at all the issues but he appeared to admit defeat before the study has even started. He admitted the government would not want to pay billions to the privately owned company to get the refinery restarted.

“I accept that it’s a private company ... I don’t believe the current government has any appetite for propping up oil companies,” he said.

“I accept that we can’t go backwards in the sense the [Labour] Government was unwilling to intervene and keep the refinery operating - that’s a fact - but the challenge of resilience, that hasn’t gone away.”

Denise Piper is a news reporter for the Northern Advocate, focusing on health and business. She has more than 20 years in journalism and is passionate about covering stories that make a difference.