Channel Infrastructure: From Refinery to Fuel Security Hub, One Contract at a Time
The Half in Brief
Channel Infrastructure delivered a robust first half, with revenue up 4% to NZ$72.9 million and EBITDA up 1% to NZ$48.8 million, despite an 11% rise in operating costs. The standout was the announcement of a new BP contract for jet and diesel storage, worth NZ$130 million over 15 years, and the completion of a government diesel storage project that added 93 million liters in just nine weeks. “We delivered 93 million liters of diesel storage for the government in just 9 weeks.” — Robert Buchanan, Chief Executive Officer · 2026-08-27 Alongside a 40% increase in in-service contracted storage volume at Marsden Point in the last three months, the company upped its FY26 EBITDA guidance to NZ$103–108 million, from the prior NZ$97–105 million.
Strategic Shift: From Refinery to Energy Security Hub
The company is executing a clear strategy to capitalize on global fuel supply disruptions and New Zealand's strategic storage needs. The Marsden Point site, once a refinery, is now being repurposed as an import and storage hub, with new contracted revenue streams that are largely independent of fuel throughput. The BP deal is a direct result of this strategy, and CEO Rob Buchanan emphasized that it's part of a broader trend: “We're seeing renewable fuels projects, including the Marsden Point Biorefinery, increasingly viewed through a security of supply lens as well as a sustainability lens.” — Robert Buchanan, Chief Executive Officer · 2026-08-27 This shift is also reflected in the company's own keyword trajectory, where diesel storage and jet storage have surged to the top of the list, replacing earlier themes around refinery operations.
Biorefinery: Opportunity Delayed, Not Derailed
The biggest uncertainty remains the proposed NZ$1 billion biorefinery at Marsden Point. The consortium's equity raise is taking longer than expected, pushing the final investment decision into 2027. Still, management remains confident, with credible international investors conducting due diligence. CFO Alexa Preston noted on the call, “we think it's a financially attractive proposition for folks to invest in” — Robert Buchanan, Chief Executive Officer · 2026-08-27 and that the delay is about timing, not interest. The company's explicit role is as landlord and infrastructure services provider, so the project would be a high-margin addition if it proceeds.
Why It Matters
Channel's transformation from a refinery operator to a contracted infrastructure owner is a compelling narrative in an era of fuel security concerns. The new BP contract not only adds NZ$130 million of contracted revenue but also validates the company's ability to repurpose existing assets for new commercial uses. The upgraded guidance and the 16% interim dividend increase demonstrate confidence in the forward cash flow profile, even as operating costs rise.
That quote from CFO Alexa Preston captures the leverage in the model. However, the company also signaled an added NZ$700,000–900,000 per annum in OpEx to support its growth pipeline, a modest but notable investment. The key risk remains the biorefinery's timing and the broader volatility in fuel demand, as evidenced by the Middle East conflict's impact on jet volumes. Still, with a strong balance sheet (net debt 3.8x EBITDA, interest cover 5.7x) and a pipeline of organic and acquisition opportunities, Channel is positioning itself as a cornerstone of New Zealand's fuel supply chain for the long term.We've added $130 million today of contracted revenue over the contracted term and increased the storage capacity of the site by 40% in the last 3 months, and that's a very modest increase in our cost base.