Revenue leak: Refining NZ expects loss up to $15m

Early estimates of the financial cost of the Auckland fuel pipeline leak are starting to trickle in, with pipeline owner Refining NZ forecasting the crisis will cost the company between $10 million and $15m in lost revenues.

The knock-on effect on the economy is expected to be higher.

Dozens of flights in and out of Auckland Airport have been cancelled because of the damage to the fuel pipeline, which is expected to take up to 15 days to repair.

Air New Zealand had by yesterday morning been forced to announce the cancellation of 18 flights, but said the fuel crisis was unlikely to have a material impact on its annual result.

It issued that statement before an afternoon update, when it warned that it was not meeting its fuel-saving target and ‘‘further changes’’ would be necessary to its schedule.

It was listing 29 cancelled flights by 4pm for the period between Monday and Wednesday.

The airline is reimbursing passengers for cancelled flights but has said accommodation and other out-of-pocket expenses are a matter for travellers and their insurers, as the pipeline cut was outside of its control.

The damage to the pipeline was detected on Thursday and Refining NZ said it had initially expected it could repair the pipe within two days by installing a clamp on the damaged section.

‘‘However, closer inspection after excavating the pipeline has shown that the damaged section needs to be replaced. Our team is now preparing for this work,’’ it said in a statement to the NZX.

‘‘Financially, the impact is expected to be twofold – reduced pipeline income and reduced refining income as Refining NZ will have to slow-run or stop units due to ullage constraints in its tank farm.’’