Z votes ‘yes’ for Refinery upgrade

27 April 2012

Z votes ‘yes’ for Refinery upgrade

Z Energy today voted in favour of a $365 million upgrade to New Zealand’s Marsden Point oil refinery, though noted there was a great deal to consider and balance in reaching the decision.

Z Energy is the locally owned fuel company owned by the New Zealand Superannuation Fund and Infratil. Z owns a 17 per cent shareholding in the refinery and is the refinery’s single largest customer.

Z Chief Executive Mike Bennetts said Z had confidence in the ability of the refinery to safely manage the construction of the upgrade and had followed a thorough process in developing the project to this point.

“However, what we have also seen in the less than unanimous approval for this project is that the New Zealand downstream fuel industry is continuing to evolve and fragment.

“While we think the outcome today is the best for New Zealand, what we have seen today, is that some major shareholders in Refining New Zealand have expressed a preference for a different outcome.

“This is consistent with what we are seeing across New Zealand’s fuel supply chain, with a reluctance to invest capital in New Zealand’s infrastructure and an increasingly tight and fragile supply chain developing as a result.”

Mike Bennetts said as the global companies had made clear in their integrated business strategies, investing capital in overseas markets rather than in small and mature markets like New Zealand made sense as the returns in oil and gas production and rapidly expanding retail markets were more than double what is generated in New Zealand.

Mike Bennetts said the changing nature of New Zealand’s downstream fuels industry, as represented by today’s vote, was a good thing which needed to continue.

“This industry has deferred capital investment in important infrastructure for too long now. Similarly, some of the arrangements which have governed this industry for the last 30 years are past their use by date and are getting in the way of companies which want to invest.

“We’re pleased that this project is continuing because, on balance, we think it has the potential to deliver the cheapest fuel to New Zealand. We don’t deny that it was a finely balanced decision but at the end of the day Z is a locally owned company, New Zealand is the only country we operate in and we’re pleased to be able to have helped get this project across the line.”

ENDS

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