Vector doubles quantity of gas available to Marsden Point refinery
Vector to spend about $25 million upgrading compression capacity.
Vector [NZX: VCT] will double the quantity of natural gas available to the Marsden Point oil refinery in a new deal with New Zealand Refining.
The operator of the country's only oil refinery reached an agreement with Vector to access more than 5 petajoules of gas per year, which it will use as fuel for its processing units, it says.
New Zealand Refining currently takes between 2 and 2.5 petajoules of gas per year.
The electricity and gas distributor will spend about $25 million to upgrade compression capacity on the northern pipeline and the Marsden 1 delivery point, which is expected to begin in September 2016.
Refining NZ chief executive Sjoerd Post says more gas provides further opportunity to grow the refining business.
"Natural gas is a cost-effective and clean energy source that gives us greater flexibility in the crudes selected for processing."
When available, the increased access is expected to lift the gross refinery margin (GRM) by at least 15USc per barrel, rising to 20-25USc per barrel at a crude price of US$60-70 per barrel. The refinery's GRM was running at US$8.86 a barrel in the year through October.
Vector CEO Simon Mackenzie says the upgrade is positive for both businesses.
NZ Refining shares rose 0.3% to $3.62, while Vector shares gained 0.6% to $3.15.
(BusinessDesk)
Sophie Boot
Fri, 18 Dec 2015
Fri, 18 Dec 2015
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Vector doubles quantity of gas available to Marsden Point refinery
54494