Refining margins at the country's only refinery, at Marsden Point, have slumped to levels not seen since 2009, prompting Refining NZ [NZX: NZR] to warn its borrowings will peak at up to $120 million more than originally expected to complete the major upgrade currently under way.
The refiner's margin slipped to average US$2.91 per barrel in September and October, according to new figures released to the NZX today, the lowest since November/December 2009, when refining margins reached their lowest point in recent years, at US$1.18 a barrel.
In the year to August, refiners' margins averaged US$6.26 per barrel.
Margins at Singapore refining facilities had been negative throughout the most recent two month period, affecting refining margins "across the refining industry worldwide," the company said in a statement to the NZX.
The impact of this change, along with a month-long shutdown to install a $55 million upgrade to the refinery's hydro-cracker unit and the $365 million Te Mahi Hou upgrade project already under way, was likely to see company debt in 2014 peak "at around $80 million to $120 million higher than originally estimated at the time of the TMH investment case".
As a result, the company will supplement its existing $300 million of banking facilities with longer term core debt of $150 million.
"The company is currently in positive discussions with its bankers to put this longer term core debt into place and a further announcement will be made when these arrangements are complete," the company said.
Current borrowings stand at around $170 million.
Refining NZ shares fell 3 percent to $2.23 in trading this morning.