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Refinery upgrade unlikely to lower petrol prices - analyst

Published: 8:41AM Saturday April 28, 2012 Source: ONE News

Motorists are unlikely to notice an impact at the petrol pumps of a multi-million dollar Marsden Point upgrade, an industry analyst says.

Refining NZ's shareholders yesterday voted narrowly in favour of a $365 million revamp at the country's only oil refinery near Whangarei.

While the upgrade will add 400 jobs to the Northland economy, it is unlikely to affect local petrol prices, TV ONE's Breakfast heard.

James Schofield, from Craig's Investment Partners, told Breakfast the impact would be reasonably marginal.

"We doubt there will be much impact," he said.

"The reality is the major factors for pump prices are crude prices, foreign exchange and tax."

Events in the Middle East and Chinese demand are the main drivers of petrol prices here, Schofield said.

But Refining NZ chief executive Ken Rivers begged to differ.

"Refining NZ has for the last 40 years provided New Zealand with 40% of its energy.

"My aim for my customers is to provide a more reliable supply, a more cost-effective supply and a supply with a lower environmental impact."

What that means is petrol prices "can't be higher as a result of me being here", Rivers told Breakfast.

But he admitted it was difficult to say exactly what the effect would be in the marketplace.

Energy and Resources Minister Phil Heatley yesterday welcomed the announcement and said the expansion is good news for Whangarei and for New Zealand's energy industry.

"Spending $365 million on this upgrade will mean 700 new jobs, higher energy efficiency and fewer carbon emissions," Heatley said.

He said the refinery will be able to process a broader range of crudes to meet New Zealand's rising energy demands.

"As our energy needs grow we have to make sure our facilities keep up. Refining at Marsden Point accounts for 40% of New Zealand's overall energy production and needs to expand to protect our energy supply," he said.

"The Government is encouraging much more 21st century infrastructure in this country. When completed, this expansion will be an important step down that road."