PM Christopher Luxon says Govt is considering whether to build a new oil refinery

Prime Minister Christopher Luxon made the comments while speaking on Newstalk ZB. Photo / Jason Dorday

Prime Minister Christopher Luxon says the coalition Government is considering whether to build a new oil refinery amid the country’s energy production challenges.

It comes as the Government’s report investigating New Zealand’s fuel resilience, including the potential re-opening of the Marsden Point oil refinery, is expected to be released in the coming weeks.

Speaking on Newstalk ZB, Luxon was asked by a talkback caller how he planned to use the country’s oil and gas resources and what part a refinery could play in the process.

Luxon voiced his support for “more domestic production” in the long term as well as importing gas “in the short term” to ensure New Zealanders didn’t face the skyrocketing energy prices they suffered through last winter.

The Marsden Point oil refinery was shut down in 2022. Photo / Tania Whyte

On the refinery, Luxon said it was “something up for review”. He noted how the Northland refinery was shut down in 2022 under the previous Labour Government.

“I’m always of the view that it wasn’t just mothballed, it was actually sort of broken up and stopped,” he said.

“It should never have happened, to be honest, because ... it’s a strategic asset and infrastructure we need.”

Asked if he would build a new refinery, Luxon said: “Well, we’re going to go look at that, that’s something we’re going to look at”.

Energy security and the future of the Northland refinery were key issues within the coalition Government, given New Zealand First was a staunch supporter of re-opening Marsden Point.

During the coalition negotiations, National and NZ First agreed to investigate the refinery’s reopening as part of a fuel security review.

The findings of that review are expected to be made public in the coming weeks. It’s understood the potential cost of reopening the facility could be as high as $7 billion to $8b.

NZ First Minister Shane Jones says the report assessing the viability of reopening Marsden Point refinery is imminent. Photo / Mark Mitchell

Resources and Associate Energy Minister Shane Jones said he would wait to provide his view on the refinery’s future until the review’s findings were published but said it contained a “range of exciting ideas”.

He acknowledged reopening Marsden Point would take a “colossal sum of money” and it would require significant discussion with National and Act, given the “huge demands on the public purse”.

Asked about Luxon’s comments on building a new refinery, Jones again referred to the review’s imminent release.

Jones said he had noticed more positive signs from the oil and gas industry in the form of an “upswing in drilling” and signalled impending announcements on how the Government would “reinvigorate the sector”.

He said the Government’s legislation to overturn the previous Government’s ban on oil and gas exploration would return to the House “very soon”.

Given the cost of reopening Marsden Point, it appeared unlikely the Government would be very supportive given its calls for spending restraint and the limited funding it had available in upcoming Budgets.

Building a new refinery or reopening Marsden Point also stood at odds with other comments Luxon made today about striving for a more bipartisan approach to policy-making.

While on ZB, Luxon said he had spoken to Labour leader Chris Hipkins this week about the need for bipartisan agreement in areas such as defence, infrastructure and social investment.

It appeared unlikely Labour would support either a new refinery or reopening the old one, particularly given the party’s steadfast opposition to the Government’s decision to overturn the oil and gas exploration ban.

Adam Pearse is a political reporter in the NZ Herald Press Gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the NZ Herald in Auckland, covering Covid-19 and crime.