Protection moves by oil refinery

Press, 3 December 1987, Page 4

Protection moves by oil refinery

PA Wellington The New Zealand Refining Co., Ltd, has taken legal action to protect itself from Government moves to deregulate the oil industry. Contracts with the Government covering the financing of the Marsden Point oil refinery are set out in “support letters” and the company has now asked the High Court to declare them valid, it advised the stock exchange yesterday. Since 1985 the company has been holding discusions with the Government over ways to deregulate the oil industry without jeopardising the

repayment of the loans made to fund the expansion project. “Regrettably, no agreement has been reached,” the company’s statement said. “The directors have now had advice from the Government that it will act unilaterally to introduce legislation into Parliament this session to deregulate the oil industry, without, in the opinion of the directors, adequate safeguards for the continued operation of the refinery.” The company has joined BP, Caltex, Europa, Mobil and Shell as defendants as well as the

Government because of their legal obligations to N.Z.R.C. under the “letters of support.” ' Legal action was the only way to protect the company and shareholders, the statement said. The oil companies own 69 per cent of New Zealand Refining Co. But the Government has guaranteed loans to the company to finance the expansion project. If competing petrol imports make N.Z.R.C. so ' uneconomic it cannot repay the loans, the Government will be faced with the debt of about $2.4 billion.