Z Energy contract drops third party
Listed petrol company Z Energy has finalised a contract with "more favourable terms" for the supply of 600 million litres of refined fuel from South Korea.
The company has been importing from the same South Korean refiner for 19 months, but the new contract will remove the need for a third party, creating "more favourable commercial terms than current arrangements".
Chief executive Mike Bennetts said about 25 per cent of the company's fuel was directly imported as refined petrol and diesel.
The rest was produced at New Zealand's sole refinery at Marsden Point.
"As a standalone local company, we have built a level of expertise such that we are comfortable contracting directly for the supply of fuel from global suppliers and we are confident we are negotiating highly competitive prices."
The dollar amount saved would not be disclosed, however, because of commercial sensitivity.
But Bennetts said it was consistent with what was assumed in Z's forecasts in its initial public offer document.
"This contract differs from the previous contract both on the commercial terms and in that Z is now contracting directly with the refiner rather than through a third party."
The new contract was expected to be formalised next month, and would come into effect at the beginning of next year.
Fuel would be delivered about once a month to major import terminals around the country.
The recently listed company this month posted a "replacement cost" profit of $51 million for the September half year, up 11 per cent on the same period last year, which Z called "a pretty good result".
The replacement-cost method better measures the underlying trading performance of the business, according to Z.
On the alternative "historic cost" measure, the company made a profit of $55.5m.