NZ Refining aims to shrink workforce, squeeze yields

New Zealand Refining plans to shrink its workforce by 8% by 2014, cut costs via new electricity and gas supply contracts, and boost its hydrocracker yield in the face of “systemic discounting” from larger refineries in South Korea and India.
New Zealand’s only oil refinery lifted its gross refinery margin to USD5.27 a barrel in the six months ending June 30, 2013 from USD4.36 a year earlier. That is still below the average of USD5.77 a barrel achieved in full-year 2012 and USD6.11 in 2011. CEO Sjoerd Post said margins will remain under pressure as global capacity continues to outpace demand.
“Refining is big capital, long lead time,” Post told a briefing in Wellington. The industry is only now seeing the impact of decisions to increase capacity that were made before the global financial crisis and in the current environment, “is quite unnecessary. That will stay like that for the foreseeable future.”
As part of its efforts to contain costs, its workforce will decrease to 517 by 2014 from the current 562. Much of this will be contractors completing projects and natural attrition, Post said.
It is aiming to cut total costs to NZD158 million (USD131.3 million) in 2014 from NZD169 million (USD140.4 million) this year, with nothing regarded as off-limits.
(August 23, 2013)