- Release Date: 15/10/15 10:03
- Summary: GENERAL: NZR: Refining NZ - Revised Freight Benchmarks
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NZR 15/10/2015 10:03 GENERAL NOT PRICE SENSITIVE REL: 1003 HRS The New Zealand Refining Company Limited GENERAL: NZR: Refining NZ - Revised Freight Benchmarks Refining NZ has renegotiated the freight benchmarks of its processing fee arrangements with its customers. This is in line with the recommendation published in the 2014 independent review of Refining NZ's processing fee arrangements by Hale and Twomey disclosed to the market on 15 September 2014. From 1 January 2016 freight benchmarks published by the Platts agency will replace the benchmarks published by the London Tanker Brokers Panel. As part of their review, commissioned by the Independent Directors of Refining NZ, Hale & Twomey assessed whether the benchmarks and associated premiums for valuing crude and product for the purposes of the processing fee calculation are appropriate. As their single finding Hale & Twomey recommended alternative freight benchmarks. Refining NZ's processing fee is calculated as 70% of its Gross Refining Margin (GRM). The GRM is the difference between prices for refined products including product freight and the cost of materials to manufacture those products such as crude and crude freight. The freight costs are calculated using published benchmarks. Since 1995 the processing agreements have used freight benchmarks published by the London Tanker Brokers Panel. These were average global assessments of freight cost because reliable regional benchmarks were not available. Nowadays, the agency Platts quotes a specific index for shipping to New Zealand/Australia which is based on actual fixtures for these trade routes. Hale & Twomey concluded that Platts benchmarks therefore better reflect actual freight costs than the existing benchmarks. While the change better reflects actual freight cost in the region, Hale & Twomey calculated that this change would have been virtually revenue neutral over the past 5 years. ENDS For further information: Greg McNeill, Communications and External Affairs Manager T: 09 432 8311; M: 021 873 623; E: [email protected] End CA:00271780 For:NZR Type:GENERAL Time:2015-10-15 10:03:19
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