Vector Annual Report 2019

Vector AR’19 ― gas trading

gas trading

Lifting standards in residential and industrial gas use Our OnGas Bottle Swap Plant won the ‘Health and Safety Initiative of the Year’ at the 2018 Deloitte Energy Excellence Awards in recognition of its leading plant and process innovations. The award marks the culmination of five years of careful design to address the wellness of its operators, including gas recapture technologies, on-site breakfasts and adoption of water-based paints. Innovation continued over the year with the introduction of new shot-blasting equipment that adopts automated machine loading functionality, increasing the Bottle Swap Plant’s capacity for gas recapture. This has dual benefits of reducing waste and limiting emissions. We have also introduced health and safety training material for our commercial customers and partners, which includes a training video specific to our forklift cylinder exchange and on-site forklift cylinder filling activities. Our bulk-use transport partners are also receiving the benefit of our new dedicated virtual-reality simulation experience. This assists drivers to run through common procedures in a safe environment.

8.5 % increase in field production and through- put at Kapuni treatment plant 1.9 % lift in gas liquid sales to 79,170 tonnes growth in FY20. A key area of focus will be to further leverage Vector group’s leading approach to risk, safety and sustainability to add value to customers in an increasingly competitive market. This includes continued efforts to share safety and hazard mitigation expertise with customers to help them advance towards their own compliance targets. Helping shape the future Our Gas Trading business performs best when we put customer needs, innovation and great service at the centre, and this will remain our approach as we work to achieve continued

Natural Gas faced a challenging year on the supply side, with multiple planned and unplanned outages of major gas fields. These outages led to significant supply disruption for some customers and contributed to a 9.0% fall in segment earnings for Gas Trading. Adjusted EBITDA for Gas Trading was down to $31.3 million 1 from $34.4 million a year earlier. Our Gas Trading business provides energy choice for consumers in their homes and businesses, and this year we saw further evidence of its enduring popularity. The LPG business delivered another strong performance, with cylinder LPG operations seeing increased volumes, while bulk LPG supplies were flat. Gas liquid sales were up 1.9% to 79,170 tonnes. Bottle Swap 9kg cylinder volumes were up 0.8% to 658,159 swaps and sales from 652,859 a year earlier. Liquigas tolling volumes were down 17.1% to 152,206 tonnes, mainly due to lack of exports over the period. On the supply side, we welcomed an 8.5% increase in field production and throughput from our Kapuni gas treatment plant this year, which contributed to the overall result. Delivering in a challenging wholesale environment Total natural gas supply in the period unprecedented market volatility as gas- fired generation remains important for the security of New Zealand’s electricity supply. Shortages of gas have a flow- on impact on retail electricity bills, particularly in periods of low hydro lake levels or high demand in winter. On behalf of our customers, Vector continues to advocate for greater transparency around upstream outages to enable better planning. In the coming year, we hope to see progress towards regulatory changes that will bring the industry more transparency, efficiency and confidence in the wholesale gas sector. 1. For the breakdown of NZ IFRS changes by segment, see notes to the financial statements. was 16.1 PJ, down 12.0% on last year. The gas field outages led to

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