Channel Infrastructure has locked in a government contract for 93 million litres of additional diesel storage at Marsden Point, adding about $8 million revenue in 2026 and reinforcing its role in New Zealand’s fuel security.
- Government contracts 93 million litres diesel storage until end-2027
- Storage capacity to be operational by 31 May 2026, accelerating supply resilience
- Contract expected to generate around $1.2 million monthly revenue
- Upgrade funded within existing debt facility, avoiding major capital outlay
- FY26 EBITDA guidance maintained at $95-100 million amid demand uncertainty
Government Boosts Diesel Storage Capacity at Marsden Point
Channel Infrastructure NZ Limited (NZX:CHI, ASX:CHI) has secured a significant contract with the New Zealand Government to provide an additional 93 million litres of diesel storage at its Marsden Point Energy Precinct. This volume represents roughly nine days’ worth of national diesel demand and is contracted through to 31 December 2027. The storage is scheduled to be operational by 31 May 2026, well ahead of a typical tank refurbishment timeline.
Accelerated Upgrade and Financial Impact
The project involves tank cleaning and the installation of connecting linework, instrumentation, and pumping systems to integrate the tanks into Channel’s existing diesel infrastructure. The company has mobilised teams and contractors working up to seven days a week to meet the accelerated schedule. Importantly, the upgrade costs are being absorbed within Channel’s current debt facility headroom, avoiding the need for fresh capital raising.
Financially, Channel expects to generate incremental revenue of approximately $1.2 million per month from the capacity availability date, amounting to around $8 million in 2026. Due to the short-term nature of the contract, this revenue will not be subject to any price indexation adjustments. The agreement also includes provisions for cost reimbursement should the Government decide not to proceed before the storage is operational.
Strategic Role in New Zealand’s Energy Security
Channel’s CEO Rob Buchanan emphasised the company’s critical role in enhancing New Zealand’s energy security, highlighting its proven track record in delivering capital projects on time and budget. The company’s work with key Northland contractors and suppliers underscores a collaborative effort to bolster diesel resiliency at scale in a compressed timeframe.
Beyond immediate storage needs, Channel is positioning itself to support New Zealand’s energy transition. Its Marsden Point site is seen as pivotal for future opportunities, including the manufacture of lower-carbon fuels and other energy security initiatives. This aligns with Channel’s broader strategy to unlock the strategic value of the Marsden Point Energy Precinct.
Maintaining Earnings Guidance Amid Market Uncertainty
While the new contract boosts revenue visibility, Channel acknowledges ongoing uncertainty in fuel demand driven by high fuel prices. Reflecting this, the company has maintained its FY26 EBITDA guidance range of $95 million to $100 million. Channel plans to reassess and provide updated guidance at its Annual Shareholders Meeting on 6 May 2026.
Channel Infrastructure remains New Zealand’s largest fuel import terminal operator, handling 40% of the country’s transport fuel and 80% of jet fuel. Its infrastructure supports fuel supply to Auckland and Northland, with strategic assets including a 170-kilometre pipeline and a stake in the Somerton jet fuel pipeline to Melbourne Airport.
Bottom Line?
Channel’s expedited diesel storage upgrade at Marsden Point strengthens fuel supply resilience but hinges on evolving demand amid high fuel prices.
Questions in the middle?
- How will sustained high fuel prices impact Channel’s diesel storage utilisation beyond 2027?
- Could Channel’s Marsden Point site become a hub for renewable or lower-carbon fuel production?
- What signals will Channel monitor to adjust its EBITDA guidance at the upcoming shareholder meeting?