28 Apr 2012

Marsden expansion given go-ahead

6:57 am on 28 April 2012

New Zealand Refining shareholders have given the green light to a expansion project at the Marsden Point oil refinery.

The company will borrow $365 million to build a Continuous Catalyst Regeneration Platformer - or CCR - to increase its petrol production capacity and profit margins.

Because of the size of the project, refinery bosses needed 50% shareholder support at the company's annual meeting at Marsden Point on Friday.

They expected the vote to be a close run thing, but after a scrutineers' count, chairman David Jackson announced 64.1% of shareholders were in favour.

Ordinary shareholders were all but unanimous in their support. Four of the major oil companies own 70% of the company and it's understood two of them voted against the proposal.

The project will be the biggest at the Whangarei refinery since its major expansion in the 1980s.

"We've got our banking facilities signed up, our foreign exchange hedges going," Mr Jackson says. "Contracts are being signed for labour, and we'll be clearing the ground over the course of the next year, starting to dig holes in the second half of 2013 and the big construction kicks in during 2014, through 2015".

NZ Refining expects the expansion to create 600 jobs in the four year construction phase, 300 of them in Whangarei.

Chief executive Ken Rivers says the company would have had to spend more than $100 million in any case to replace ageing gear, but the expansion will future-proof the refinery, keeping it ahead of Asian and Australian competitors.

Mr Rivers told Checkpoint the shareholders have made the right strategic decision.

"I'm delighted that they are getting the value that they saw in the project. I'm delighted for my staff who worked really, really hard on this over the last two and half to three years and I'm delighted for the 600 people across Northland and New Zealand who will now have jobs in that construction period."

Whangarei stockbroker, investor and accountant Wally Yovich says the work will give the town a badly-needed boost and, strategically, the company's made the right decision.

Mr Yovich says it was going to have to have an upgrade just to stand still, so the shareholders have voted for progress.

Whangarei Mayor Morris Cutforth says the news will encourage business confidence in the region, which has one of the highest unemployment levels in the country.

He said independent analysis estimates the project will lift GDP in the region by about 1.3%.