Australia's biggest fuel company Ampol is poised to take over local Z Energy and take its place on the New Zealand sharemarket - as long as it jumps one last High Court hurdle this month
Ampol chair Steven Gregg has revealed Overseas Investment Office approval to buy Z Energy, which he says is "an important step" towards finalising the acquisition.
EXCLUSIVE: Selling petrol for $3 and the whole company for $2 billion Z Energy chief executive Mike Bennetts fields questions live on Pro Talks at 12.30pm, Wednesday April 13 - and Newsroom Pro subscribers can join in and ask questions. Register here for today's webinar.
Ampol Holdings NZ Ltd, a wholly owned subsidiary of Ampol, is now waiting only on the High Court's approval of the scheme at a delayed hearing on April 26. It will then notify the Commerce Commission that the deal is going ahead, to be implemented in mid-May.
Shareholders have agreed to the purchase of their shares at $3.76, and there were no objections to the scheme by last week's deadline.
Ampol’s receipt of Overseas Investment Office consent is an important step in progressing Ampol’s proposed acquisition of Z, Gregg told investors in a statement to the ASX. "The remaining key condition is approval by the High Court."
The High Court hearing was set down for today, April 13, but Z Energy said the requirement to give sufficient notice to the Commerce Commission had forced the postponement of the court application.
It's a rare glitch in a massive acquisition, that has otherwise appeared to go smoothly. But the big question for the New Zealanders will be whether slow-moving Ampol shows greater commitment to transitioning away from fossil fuels.
Z Energy chief executive Mike Bennetts, who has led the company since it was set up to purchase Shell's refining and retail business in New Zealand, is stepping out of today's Z Energy board meeting to give a live webinar interview about the acquisition to Newsroom Pro and its subscribers. (Register now, to ask questions at 12.30pm).
Ampol has committed to reducing its Scope 1 and 2 operating emissions, but has been making slow progress on any strategy to reduce scope 3 emissions - the downstream climate impact of the petroleum it sells. And with the acquisition of Z Energy, it will be the biggest retailer on both sides of the Tasman.
Bennetts has convened the Climate Leaders Coalition and championed biofuels, commissioning a short-lived project to produce biodiesel from meat tallow at a plant in Wiri, south Auckland. Ampol, too, has told Newsroom it's looking at a range of lower emissions technology solutions for the medium to longer term, and will invest at least AUD$100 million in future energy projects to 2025.
"We've been at it longer, but they've been very active in the last six to 12 months," Bennetts told Newsroom, on announcing the Ampol acquisition plan. "Neither company has specific targets. But certainly Ampol has announced investments in charging infrastructure and a hydrogen activity next to their refinery in Lytton, Brisbane. They've invested in a hydrogen start-up, so they're just as active as us."
With federal Government backing, Ampol is installing EV fast chargers at 121 petrol stations, as part of that $100m spend. Bennetts had previously been unconvinced by the merits of EV chargers on forecourts, but has now followed Ampol's lead. In February, Z announced it would begin scaling up its New Zealand EV charging network through a strategic funding partnership with the Energy Efficiency and Conservation Authority.
Ampol chief executive Matthew Halliday told Newsroom last year both companies were committed to decarbonisation: "I really think that the greater scale in a combined business can help both businesses build on their existing work to accelerate momentum. Because ultimately this transition is all about finding and providing low emissions solutions for our customers."
They don't see eye to eye on everything. Halliday was reluctant to answer questions about the Marsden Point refinery closure. But while Z Energy was quick to support the closure of New Zealand's only oil refinery, its Australian counterpart has claimed big government subsidies to keep its Brisbane refinery open, pleading national security in the face of global tensions.
In today's Pro Talks, Bennetts will be highlighting the importance of security of supply and onshore fuel storage, as Russia's invasion of Ukraine threatens global distribution networks and drives up pump prices.
He is pushing for changes to the Government’s proposals for minimum onshore fuel stockholdings, which don't count the oil held in massive tankers en route to New Zealand. If they were included, Z says it could meet the increased stockholdings requirements, without potential large cost implications to consumers.
Right now, the company has two fuel tankers on the coast of New Zealand, and two vessels arriving at Marsden Point shortly.
Z Energy's supply general manager Julian Hughes said the international shipments would be discharged at the Marsden Point import terminal, after the closure of the refinery this month. The fuel could then be sent down the pipeline to Wiri, or loaded into tanks or trucks.
At any one time, Z calculated it would have four shipments on the water, Hughes said, which equated to 185 million litres or 148,000 tonnes of product. With an average voyage time of 22 days, there would be one Z vessel arriving into New Zealand every five or six days.
"We should be able to count stock on water as part of our overall stockholding levels as Z takes control of the cargo from when it is loaded, so can direct the vessel as needed - that is, speed up, slow down, take another route," Hughes said.
He said Z typically targeted stocks of petrol and diesel at about 50 percent of tank capacity, as this was a good equilibrium between a safe and reliable supply chain, and efficient operating. That would cover the company's needs for 35 to 40 days, including the stock on the water.
Channel Infrastructure has shut down the Marsden Point oil refinery but its chief executive, Naomi James, told Pro Talks last week that the company's tanks were now available to store reserves of refined oil to tide New Zealand through the Ukraine crisis and beyond.
The company had already done deals with its biggest customers and shareholders, Z Energy, Mobil and BP. "We have signed agreements with the oil companies for 280 million litres total product storage," James said.
Of that, 180 million litres is shared by the companies, and 100 million litres is private. "To put that into context, the 100 million litres private is equivalent to around four days cover for New Zealand, based on 2019, pre-Covid demand. That's with capacity to increase available storage if it were required."
"The shift is really that we're sourcing it from a range of refineries around the world," she said. "Our customers primarily source from refineries in Asia, to supply New Zealand. That was already occurring for about 30 percent of our fuel supply, even while we had the refinery operating. So one of the changes with the transition is we're less dependent on a single refinery than we were previously. And our supply will be coming from a range of refineries around the Asian region."
EXCLUSIVE: Selling petrol for $3 and the whole company for $2 billion Z Energy chief executive Mike Bennetts fields questions live on Pro Talks at 12.30pm, Wednesday April 13 - and Newsroom Pro subscribers can join in and ask questions. Register here for today's webinar.
