N.Z. ‘cannot afford for Marsden Pt to fail’

Press, 18 February 1983, Page 3

N.Z. ‘cannot afford for Marsden Pt to fail’

Parliamentary reporter New Zealand cannot afford for the Marsden Point refinery expansion to fail, according to the Minister of Energy. Mr Birch. He has outlined a number of reasons why the project is going ahead and how they benefit all New Zealanders. The expanded refinery would save New Zealand about $lBO million a year in reduced oil import bills, he said. That meant savings of $l5 million a month by refining oil products here rather than importing them from overseas. This would help the New Zealand economy to grow, because the present shortage of foreign exchange is constraining the economy. The new refinery would give New Zealand much greater flexibility so it could buy the cheaper crudes outside the Middle East. Mr Birch said. The present refinery could handle only the light Arabian crudes. The new equipment, specifically the hydrocracker. had the ability to maximise diesel and jet fuel production, and would complement the other Government programmes involving the production of synthetic gasoline and the promotion of L.P.G. and C.N.G. Expanding the refinery was essential if New Zealand was to achieve its target of 50 per cent self-sufficiency in transport fuels Jay 1987. he said. This was well on the way.

The refinery would provide work for about 2000 New Zealanders and 500 overseas skilled immigrants

over a five-year period. The new refinery would also provide 200 more permanent jobs in the Whangarei district. Mr Birch said. Overseas, where there was an excess refining capacity, was of no help to New Zealand. Most of this involved refineries like Marsden Point which had little or no cracking capacity. A hydro-cracker was needed if New Zealand was to produce the diesel and jet fuel it needed, he said. An analysis of the world oil supply demand balances for the future had shown that additional cracking investment must be made in the second half of the 1980 s to preserve particular product supply-demand balances. The products which were growing most quickly in the world economy were diesel and jet fuel, which were both very important to New Zealand, Mr Birch said. The expanded refinery would be able to supply all New Zealand's present and projected needs. . It also had to be remembered that the present oil glut on the world markets was not expected to last long-term. Be that as it might, the bulk of the benefits from the refinery expansion arose from the differentials in values between naphtha, middle distillates, . condensates, crudes and fuel oils, and much less from the level of oil prices, he said. More than $5OO million had already been spent on the Marsden Point refinery expansion, with a lot of this on procurement. This investment was an economic form of import substitution, Mr Birch said. Unlike some other industries that for one reason or another had been built, the existing refinery saved New Zealand $300,000 a day for every day it was in operation. The extra benefits from the expansion were such as to save, in gross terms, about a further $500,000 a day for every day it operated. This was $l5 million a month. New Zealand imported 10 per cent of its fuel oil, 35 per cent of its auto diesel, 25 per cent of its petrol, 100 per cent of its jet fuel and kerosene, and 100 per cent of continuing non-refinery grades such as petroleum coke, aviation gasoline, and others. New Zealanders should make no mistake about the importance of the refinery expansion to them as individuals, Mr Birch said.

It would contribute significantly to the supply of essential fuels at a competitive price and would be part of New Zealand’s drive towards self-sufficiency in energy.