Asia-Pacific refining margins remain volatile with Singapore gasoline margins gaining almost US$5 a barrel in the past two weeks, Refining NZ says.
The company’s processing charges are based on the margins that operators of complex refineries in Singapore achieve relative to Dubai crude oil prices. Those margins turned negative in January and February – averaging -32 US cents a barrel for the two months – mostly due to weak gasoline demand.
Refining NZ, which operates the Marsden Point refinery, said at their lowest point, gasoline in Singapore was selling for US$2 a barrel less than the Dubai crude it was made from.
“The Singapore gasoline margin – which directly impacts Refining NZ’s processing fee income – recovered to over US$1 per barrel by the end of the January/February period and is currently just under US$6 per barrel. This recovery has been driven by strong South – and South-East Asian demand, significant refinery maintenance and falling US gasoline stocks.”
Refining NZ shares were recently up 2.1 percent at $1.97. They have fallen about 16 percent the past year.
Marsden Point is the country’s only oil refinery and produces about 70 percent of the petrol, diesel and jet fuel used in New Zealand. It is 43 percent-owned by Z Energy, BP and Mobil, and has to compete with Asian plants to deliver fuel cheaper than those customers can import it directly.
The plant last faced negative Singapore margins in mid-2014. Despite the recent global pressure on gasoline margins, the firm delivered a gross margin of US$4.88 a barrel during January and February.
That was down from US$6.53 in the final months of 2018 but an uplift of US$5.20 over Singapore margins – the biggest uplift achieved in almost two years.
The company said a balanced product mix and 100 percent uptime helped.
“A new hydrocracker throughput record was set which supported production of higher margin jet fuel and diesel.”
The company is aiming to process a record 44 million barrels this year. The current record was 42.67 million barrels in 2016.
The plant processed 6.96 million barrels of crude during the past two months, down from 7.01 million a year earlier and 7.31 million in November-December.
The lower throughput and margins saw the firm’s processing fee revenue fall to $34.9 million for the two months, down from $50.8 million a year earlier and $49.2 million in November-December.
Refining NZ said the decline in throughput was due to delays of some crude shipments and reduced gas supplies due to maintenance work at the Pohokura gas field.
Field operator OMV plans to complete that work by the end of April.
“Refining NZ continues to build a gas portfolio and will make up any shortfall through firing of liquid fuels. It does not expect any material impact on the company.”