NZ’s biggest fuel retailer has been forced to disclose sites it had land-banked for potential service stations or other uses, to gain official approval for a trans-Tasman takeover
Regulatory approval for Australian fuel giant Ampol's $2b buyout of its Kiwi counterpart Z Energy has come at a cost.
The Overseas Investment Office published its decision approving the takeover yesterday – but in doing so, it also published the list of 34 sensitive rural and coastal properties that Ampol will acquire.
One of the properties was an immaculate 947 hectare breeding and finishing farm east of Matiere, Ruapehu – a block of farmland as big as downtown Auckland, Wellington, Christchurch and Dunedin combined. Now that Z and its business partners have bought it, three-fifths of the block has been turned over to carbon farming trees.
Z Energy external communications manager Haley Mortimer said the company was a limited partner in the carbon farming alongside Air NZ, and energy companies Genesis and Contact, in a partnership called Drylandcarbon.
"This partnership sees the four companies invest in the establishment of a geographically diversified rotational forest portfolio on marginal land to sequester carbon," she said. "The primary objective is to produce a stable supply of forestry-generated NZU carbon credits which will support the partners to meet their annual requirements under the NZ Emissions Trading Scheme."
Z Energy had no operational control of the limited partnership, she added.
Other sites have existing service stations, or the remains of old service stations that have been shut down and are awaiting remediation of the poisoned ground. One is an unstaffed diesel truck stop right on the industrial waterfront by Dunedin port.
But much of the land consists of small blocks alongside rural roads – which it's understood is being land-banked for future development.
Mortimer said some of the land blocks were legacy sites that Z had acquired through the purchase of Shell’s New Zealand business back in 2010. "We have chosen to hold onto them since that acquisition in case there are future opportunities for use," she said.
"Some sites listed maybe classified as having a level of historical ground contamination. In any situation where that has occurred or been noted, it is logged with the local council along with an agreed remediation plan and monitoring process."
The Overseas Investment Office decision says: "Z Energy has an interest in sensitive land that consists of residential land sites (service stations, fuel facilities, future development sites, and sites acquired in order to deal with historic contamination issues), a truckstop fuel facility adjoining Otago Harbour, and a minority limited partnership interest in carbon forestry that may include some farm land."
But any concern about overseas ownership of these sensitive blocks of land was outweighed by the perceived benefits to the community.
"The investment is likely to result in a substantial amount of additional investment focused on the development of future energy initiatives, improving infrastructure, and Z Energy initiatives to expand its retail network and refresh its convenience stores," it says.
“The investment is further likely to support government policies regarding climate change and security of fuel supply.” – Overseas Investment Office
"The investment is also likely to result in the creation of new jobs within the Z Energy business through cadetship and graduate recruitment programmes. The investment is further likely to support government policies regarding climate change and security of fuel supply."
The Overseas Investment Office granted consent to the Ampol investment because, it says, the benefit likely to occur as a result of the investment is considered substantial and identifiable.
Ampol was advised of the approval on April 12, and advised the ASX and NZX sharemarkets. But the details and reasons behind the decision hadn't been made public, until the summary of the decision was published yesterday.
The Overseas Investment Office released the decision early, due to a high level of public and media requests in relation to the sale.
Fuel companies, as with the two big supermarket chains, have long been accused of land-banking, and either developing their properties or selling them as eventually proves more lucrative.
So this year, for instance, Z Energy reports it is selling a 49 percent non-controlling interesting in a newly established entity that will own a high-quality portfolio of 52 Z Retail properties, totalling 161,000 square metres.
The newly established entity will then lease all 52 properties back to Z Energy to operate its service stations.
Z sought an independent valuation of all land and building assets in preparation for this transaction, resulting in an asset revaluation uplift of $148m across the asset classes of land, land improvements and buildings. The transaction, which it describes as complex, was to be completed last month.
Murray Horton, the secretary of the Campaign Against Foreign Control of Aotearoa, expressed concern that with the Ampol purchase of Z Energy, all major petrol retailers in New Zealand would once again be back under foreign ownership.
"Land-banking is a negative practice that happens across several industries – the recent Commerce Commission inquiry into the supermarket duopoly highlighted it," he said. "It has also been an issue in post-quake Christchurch, especially in the central city."
Horton added: "Coming at the same time as the oil transnationals who own the Marsden Point refinery are closing it down and leaving NZ dependent on shipments from Asian refineries, this reversion to foreign ownership of all of New Zealand's petrol retailers further puts at risk New Zealand's fuel security, particularly as the Ukraine war is putting a question mark over global fuel supply and security."
Because Z Energy is listed on the NZX, it isn't actually New Zealand owned. The Overseas Investment Office decision shows that just 55 percent of shareholders are New Zealanders. The rest are from Australia (29 percent), USA (9 percent), UK (2 percent), United Arab Emirates (1.3 percent), Switzerland (1 percent) and various other countries.
