New Zealand Refining Co. Margins Rise 32% on Increased Demand

By Gavin Evans

Aug. 19 (Bloomberg) -- New Zealand Refining Co., operator of the country's only oil refinery, said profit in May and June rose 32 percent on increased demand and higher prices.

The average refining margin climbed to $17.10 a barrel during the period, from $12.92 in March and April and $10.39 a barrel a year earlier, New Zealand Refining said in a statement to the New Zealand stock exchange today.

The Ruakaka-based company is controlled by the local units of Chevron Corp., Royal Dutch Shell Plc, Exxon Mobil Corp. and BP Plc. It charges those customers a fee based on Singapore refining margins to process their oil at the Marsden Point refinery in the north of the country's North Island.

That agreement caps average refining fees at $9 a barrel over a year. Accordingly, $53.1 million of fees weren't booked during the period, with customers charged a total of NZ$53.6 million ($38 million).

Margins have been below $9 a barrel since late July, the company said. If they remain below the cap for the rest of the year, New Zealand Refining can recoup some of its fees. Earlier high margins mean the company holds a potential revenue buffer of $62 million, the refiner said.

The company achieved near-full capacity, processing 6.5 million barrels of oil during the period, from 6.2 million a year earlier and 6.6 million in the prior two months.

To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net