Hydrocracker issues prove costly for NZ Refining

AUCKLAND: New Zealand Refining’s hydrocracker shutdown will cost it between $5 million and $7 million, and the machinery will be out of service until the middle of the coming week.

A hydrocracker uses hydrogen to break down heavy oil fractions, recovered from crude oil, to produce petrol, kerosene — used as jet fuel — and diesel. NZ Refining is New Zealand’s only oil refinery, and describes its hydrocracker as ‘‘the heart of the refinery.’’

The Whangareibased company said the unit was shut down earlier this week after a newlyinstalled valve failed, lengthening delays from its scheduled refinery maintenance shutdown.

Yesterday, it said the leak would have a net profit impact of between $5 million and $7 million, and it expects the hydrocracker to produce onspecification fuels by the middle of the coming week.

The refinerywide shutdown was planned to run in stages from April 20 to June 8, and NZ Refining was to spend

$85 million on it, with a predicted financial impact of $30 million, but the restart was delayed due to maintenance issues and minor leaks.

Last week, the company said there had been a delay with the hydrocracker due to two minor leaks and its team was assessing when it would be restarted.

The latest leak was unrelated to those earlier leaks.

NZ Refining also said last week that the shutdown would cost

$25 million to $30 million more than the $85 million it previously forecast, implying a cost of

$110 million$115 million, and will cut $40 million from profit in calendar 2018 as opposed to the $30 million previously flagged.

The company’s shares have fallen 6.8% this year. — BusinessDesk