Thursday 19 April 2012

News from Australia and New Zealand


NZ produces and exports oil but none of this is refined here; all of the oil NZ consumes is imported (either refined here or imported gasoline

The question is whether the expanded refinery will allow for the refining of NZ oil.

Expanded NZ refinery could mean cheaper petrol
The boss of New Zealand's only oil refinery says its expansion plans will help secure oil supplies for the country and could result in cheaper petrol prices.


19 April, 2012

Refining NZ, which operates the Marsden Point facility north of Whangarei, is planning to spend $365 million to expand and update its "petrol making kit".

Chief executive Ken Rivers told TV ONE's Breakfast that the main reason is to process more of the petrol that New Zealand needs locally, rather than importing it.

"Currently we make about 50-55% of the petrol New Zealand needs, and this will increase that to about 65%," he said.

The rest of the petrol used in New Zealand is directly imported by oil companies, mostly from Asian refineries.

Rivers told Breakfast that he hopes the increased production - at a cheaper price than importing - will lend to pump price drops for Kiwi motorists.

"If we can produce a more reliable, more cost-effective supply with a lower environmental footprint... it can't have a negative effect on petrol prices," he said.

Rivers said Refining NZ believes its expansion will improve the reliability and sustainability and also "the resilience" of New Zealand's oil supply.

'Jewel in the crown'

Rivers described Marsden Point as New Zealand's "best-kept secret" and a "manufacturing jewel in the crown" that is already extremely efficient compared to international rivals.

The expansion is expected to increase energy efficiency and allow a broader range of crudes to be processed.

The site was originally developed in the 1960s to refine heavy, dirty crudes but now wants to focus more on the lighter crudes that have the components of petrol in them.

The refinery currently produces about 70% of all transport fuel used in New Zealand including all of the jet fuel, about 80% of diesel, and between 75-85% of bitumen for roads.

The company says construction will take around three years and is expected to generate up to 300 jobs new jobs at the refinery.

Oil companies BP, Chevron, Mobil and Z Energy (part-owned by the NZ Super Fund) are significant shareholders and customers of Refining NZ.

The expansion plans, which will be funded by bank loans, are supported by the company's Board of Directors.

The next step, a vote of shareholders, will take place at the company's annual meeting on April 27 and Rivers said the support is strong so far.





Asians pile into Aussie bonds as $250bn debt ceiling is put in doubt

ASIAN sovereign wealth funds and central banks have seized a record level of Australia's growing government debt, which is soon likely to threaten the nation's debt ceiling


18 April, 2012

Analysis by The Australian has shown the slice of debt owned by Asian investors has jumped from 5.8 per cent to at least 12.9 per cent in just two years.

Labor has overseen a $120 billion blowout in gross debt over the past three years, sparking the prospect that the $250bn debt ceiling will have to be raised.

The federal government's gross debt level has soared from $117.3bn in 2009 to $237.43bn, as a result of its fiscal stimulus program during the global financial crisis.

The Australian Office of Financial Management estimates that Asian investors have become the most active buyers of Australian debt, helping push government bond yields to record lows below 4 per cent.

The combined share of European and North American investors has dwindled to as little as 5.7 per cent as the worsening European sovereign debt crisis has prompted continental investors to repatriate funds.

Overall, overseas ownership of the federal government's debt has risen to 75 per cent, from 35 per cent in 2003 and practically zero in the late 1970s.

Between half and two-thirds of that stems from central banks and sovereign wealth funds.

The AOFM, which oversees the commonwealth government's bond sales, can work out the country of residence for the holders of about two-fifths of the nation's $237bn debt burden.

Asia's increased appetite for domestic debt has been attributed to Australia's sovereign credit rating, higher interest rates and brighter economic prospects compared with the rest of the world.

UBS interest rate strategist Matthew Johnson said the strength of the credit rating was crucial to maintaining international investor support.

"It's all about winning the AAA beauty pageant," he said. "Australia is one of the prettiest contestants, and expected to remain so, notwithstanding the downside scenarios investors worry about."

A number of major countries, especially the US and France, have lost their prized AAA-credit rating in the past year. "Many investors are seeking to diversify out of US dollars, the traditional reserve currency, because of caution about the longer-term sustainability of the US fiscal position," ANZ head of interest rate research Tony Morriss said.

Deutsche Bank head of research in Sydney, David Plank, said it made no difference who ultimately held Australia's public debt, saying that "increased participation from central banks and sovereign wealth funds is arguably a good thing because their decisions are less prone to sudden reversal".

The 17-odd domestic and foreign banks allowed to on-sell Australia's debt are naturally cagey about their clients' origin.

Although Australia's bond market makes up about 1 per cent of the world total, one senior bond trader in Sydney believes central banks and sovereign wealth funds in Asia and Latin America are now using investment benchmarks that recommend allocating 5 per cent or 10 per cent of their portfolio to Australian bonds.

"Because they are so large, a small change in their reserve allocations can have a whopping impact on the fraction they hold here," he said.

The federal government will struggle to satisfy foreigners' burgeoning demand for Australian bonds unless it can increase the $250bn debt ceiling, which was increased by $50bn after last year's budget. In two years, the government's debt burden has grown by about $100bn after a string of large budget deficits.

Wayne Swan revealed last week that tax revenues were $2bn short of expectations this year, which would exacerbate existing budget projections that showed total gross borrowing would hit $262bn next financial year.

Gross debt, to which the legislated debt ceiling applies, can continue to grow even if "net debt" falls, because the National Broadband Network and the incipient Clean Energy Finance Corporation are funded from government borrowing but are treated as assets.

Partly for these reasons, opposition treasury spokesman Joe Hockey said last week that he had "deep reservations" about supporting any increase. Finance spokesman Andrew Robb said the government should come clean on whether it would have to raise the debt ceiling, and if it did, there should be a proper debate and it should not be buried in the budget appropriation bills like last year.

Independent MPs Rob Oakeshott and Tony Windsor declined to comment, as did the Greens.

Mr Oakeshott has previously expressed reluctance to support any increase in the debt ceiling.



NSW: Gas supply to dwindle in the next two years
THE state government has warned of gas shortages emerging in NSW within the next two years as it puts its weight behind coal seam gas to head off any supply disruptions


19 April, 2012

Large numbers of Nationals and Liberal Party MPs are opposed to allowing the widespread use of coal seam gas due to environmental concerns, especially over the likely impact on aquifers in farming areas.

In its submission to the federal government's draft white paper on energy, the state government has warned gas could begin to run short in NSW from as soon as 2014, as long-term supply contracts from the Cooper Basin in central Australia begin to expire.

At the same time, oil and gas reserves in the Bass Strait,are running out, which will place further pressure on NSW to find additional sources of gas.
The warnings come as the power industry is moving to use gas to replace coal as its preferred source of energy to generate electricity as a result of the carbon tax which is to begin from midyear and may make it uneconomic to use coal.

For article GO HERE

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