SINGAPORE, Feb 17 (Reuters) - Refining NZ NZR.NZ has made "significant progress" in a study towards converting New Zealand's only oil refinery into a fuel import terminal, commencing as soon as next year, the firm said on Wednesday.
Its Marsden Point refinery, which fills about 70% of New Zealand's fuel needs, has battled competitive pressure from huge refineries in Asia and rising domestic costs of power and gas, even as the coronavirus crisis caused unprecedented destruction of fuel demand. no decision has been made, Refining NZ is now well progressed in its assessment of the import terminal option," the company said in a statement.
The conversion to an import terminal would bring a sharp reduction in emissions for Refining NZ, as well as a cut of about 85% in electricity consumption.
The company added that it was focusing on a detailed estimation of one-off transition and conversion costs, terminal operating and capital costs, and longer-dated refinery demolition costs.
Total one-off transition and conversion costs are now estimated at about NZ$200 million ($144 million) over four or five years, excluding refinery demolition costs, it said in the statement.
Refining NZ said it had reached in-principle agreement on key commercial terms, including price, with BP Plc BP.L , but is still in talks with two other customers, Z Energy ZEL.NZ and the New Zealand units of Exxon Mobil Corp (NYSE:XOM) XOM.N .
The company expects the conversion will not require any additional equity funding, but said a final decision would require approval of non-customer shareholders.
Late this month, the refinery is set to begin a four-week turnaround of a continuous catalytic reformer (CCR) platformer and a crude distillation unit (CDU 1), leading to a temporary shuttering of all processing units, with customers using imports of refined products.
The refinery, which has cut its primary crude intake by 18%, has already mothballed its CDU 2 as a part of the decommissioning. ($1 = 1.3928 New Zealand dollars)