NZRC chairman Ian Farrant said his board had agreed to develop a proposal to increase NZRC's crude oil intake by apbout 20%. This would reduce the refinery’s dependence on imported residue for hydrocracking and blend stocks for the production of petrol.
The NZ$25 million development proposal would provide the board with sufficient detail to make a final investment decision by the end of 2006 on whether to proceed with the proposed NZ$500 million expansion project over three years, with commissioning possible in 2009.
NZRC chief executive Thomas Zengerly said the continued strong financial performance of the company had given the board the confidence to develop the proposal further.
"Profit forecasts are difficult to make in a market environment which can change so rapidly as a result of external global events, as we have seen through the impact of recent hurricanes in the US on refining margins and tanker freight rates,” Zengerly said.
But on the basis of currently available data and NZRC’s expectations for the rest of the year, he said the company's full-year, after-tax 2005 operating surplus was likely to exceed last year's result of NZ$97.5 million by around 40%.
The proposed expansion would ensure that NZRC was able to keep up with New Zealand's growing demand for quality fuels.
"NZRC has passed an important milestone today. I am encouraged by the confidence the board of directors has in this company to develop such a significant growth project."
Key aspects of the project scope were to increase crude distillation capacity by modifying an existing crude distillation unit, and constructing new process units to increase refinery output, in particular the production of petrol.
"We will work hard to develop the proposal in sufficient detail to provide the board with the information needed for a final investment decision by the end of 2006," Zengerly said.
The refinery currently refines over 35 million tonnes of petroleum product each year – supplying about 90% of New Zealand’s diesel needs and about 60% of petrol requirements, with the rest imported, primarily from Australia and to a lesser extent Singapore.
