NZRC chairman Ian Farrant announced the decision yesterday, saying global refining margins had been “excellent” over the last few years – “so nearly everyone around the world is looking at expanding refining capacity”.
He said NZRC had spent two-and-a-half years and almost $NZ30 million working on strategies to increase refinery output, and completing various studies and engineering designs to ensure the company selected the right upgrade option.
While the refinery’s ability to process crude oil would increase by about 20%, output would only increase 10-12% once the project was finished in 2009.
“This apparent anomaly is caused by us replacing imported residue – a by-product of other refineries – with crude oil,” added Farrant.
The refinery processes an average 3.2 million barrels of crude per month.
Farrant said the annual rate of return from the project was expected to be “in the high teens”, based on a gross refining margin of about $US5.20 per barrel and an average exchange rate of US58c. Recent NZRC refining margins have been as high as $US9/bbl.
Project Point Forward is the second major project for NZRC – majority owned by BP, Shell, Mobil and Caltex – in recent years.
NZRC completed the $NZ180 million Future Fuels project in August 2005, allowing the latest European fuel-efficient vehicles to run on the refinery’s cleaner fuels.
The refinery, just outside Whangarei, supplies over 70% of New Zealand’s refined oil, around 60% of its petrol and over 75% of its diesel and jet fuel.
