Yep looking like it could be a winner now at 76 c
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Yep looking like it could be a winner now at 76 c
When facts change, best I change my view to fit.
I started reading the explanatory booklet and my feeling going in was capitulating at super low refining margins takes away from the upside that might come in the next few years. This would be by managing to eke out the last bit of life before decommissioning the refinery and converting it to a terminal.
But those subsidised mega refineries in India and South East Asia mean that without state support for a strategic bit of infrastructure like a refinery then short and medium term NZR is toast. Hard to compete with govts who are willing to subsidies their petrochemical industries for strategic or economic reasons and completely ignore the economics and smash the GRM down.
Gas spot up 135% over the last 5 years and electricity up 240% over same period, hard to stay profitable in those circumstances.
Still digesting the commercial terms of the deal (at page 42 of 160 in the explanatory booklet - phewww) but at this stage ill be voting for the proposal.
For what it is worth not buying at these prices but pleased I kept loaded up around the mid 40c mark.
Always worry about the employees in a situation like this. I wish it was a less cyclical business but hopefully they can do well elsewhere. Super skilled workers.
Checked the plan for the pensions and looks like they have offered to cash out those that are still on the old (pre 2002) defined pension plan and medical plan (pre 1996).
I expect the cash offers wont be as valuable as the defined benefit they are losing but suspect the workers see the writing on the wall.
If we are importing oil for said refinery, aren't we still at the whim and vagaries of foreign powers/companies??
I would have thought only difference would be probably have more options for oil than refined products.
Is it better to refine your own or buy cheaper from other sources??
Your right that the crude still needs to be purchased overseas. The main benefit to govt support for the refinery, is that a working refinery will store a lot more oil than a terminal which is focused on moving material through as fast as possible. Grant Samuel mention in their section, currently the refinery holds 18 days supply for the whole of NZ. As an import terminal it would only hold enough for AKL and Northland. This means the system becomes a lot more fragile if global shipping is effected and a shipments are delayed.
Note the aussies often take a different view on this sort of stuff so interesting they are putting in up to $2.3 Billion to upgrade and keep open Geelong and Lytton refinery. Can't see labour/Greens getting behind that sort of support for NZR.
Got to the end of the report and ill be voting yes to the plan.
SailorRob, how nice of you to remember! Well, it's not over yet until the f...l...sings.
And if it does go to a terminal only, it will be a sad day for many people, and bad for NZ in that we will be at the mercy of the overseas refiners.
But of course, as an investor it has been good of late. It is looking up and it does not look like it's going to stop. Can't argue with the market so at least jump on for the ride.