Farrant said New Zealand had sufficient time to prepare for this situation and that NZRC was evaluating the backstop option of importing LNG, as were other companies.

LNG would be viable if insufficient indigenous gas was found “in the near future”, despite increasing exploration activity.

Earlier this year NZRC completed its feasibility studies into an onsite cogeneration project but could not progress the matter further until it confirmed a long-term source of fuel, “preferably natural gas”, at economic prices.

“We are keeping a close watch on both energy and electricity and will review the project later in the year,” Farrant said.

The NZ$180m Future Fuels project was nearing completion, with mechanical construction now 85% finished. Testing and pre-commissioning activities were about to start, with the new processing units put into operation during August.

Another NZ$4m would be spent investigating de-bottlenecking options which could increase the capacity of the Marsden Point Refinery by up to 20% from 2008.

Earlier this year NZRC reported a record net profit of NZ$97.6m for 2004, on the back of strong global demand for oil products, particularly in Asia. This was despite a high Kiwi dollar which impacted negatively on NZRC operations.

“We expect this period of a strong New Zealand dollar to continue in 2005 and we have planned accordingly,” Farrant said.

Results for the first four months of the current year were also ahead of expectations and Farrant also predicted the strong global demand for petroleum products and the tight supply situation to continue.

“Refineries cannot be built overnight. The last refinery to be built in the USA was more than 30 years ago and, in the short term, we expect the refining margin to remain stronger than in the nineties.”