CO2 gas prices soar 600% amid shutdowns

According to a letter sent to customers, gas distributors have raised some prices by nearly 600% because the Kapuni CO2 plant has been shut down.

The Todd Energy Plant, the only producer of food-grade CO2 in the country since the closure of Marsden Point last year, closed for three weeks for safety reasons.

BOC bottles the gas, uses it to make dry ice, and sells the product to customers ranging from hospitals to food to food. beverage manufacturer.

A letter dated 10 January from BOC to customers presented to RNZ stated, “Following the unanticipated and continued supply interruptions at Kapuni’s third party sources, there are significant challenges to carbon dioxide supply. “It has said.

It said that because the situation “is beyond BOC’s reasonable control, BOC’s supply obligations are suspended during this period.”

“Compressed carbon dioxide and dry ice for customers will be restricted after December 22nd, 2022 to maintain medical, safety and water supply to our customers,” the letter said. rice field.

The BOC said it was expanding its import model for carbon dioxide products, but said it would incur “significant costs” to bring the products in from abroad.

“We will also need to distribute products to customers in smaller than normal quantities.”

The new prices will go into effect on January 16th for 3 months, after which they will be reviewed.

Some bottles have gone up from $37 to $216 a bottle.

Others from $31 to $117.

“Where feasible, BOC encourages customers to consider alternative gases and processes to reduce their dependence on carbon dioxide during this difficult time,” the letter said.

The customer was asked to complete a form indicating that they agreed to the new price.”Otherwise, BOC will stop supplying carbon dioxide to your facility.”

BOC acknowledged the commercial impact on customers, saying the company was committed to keeping customers informed in an “evolving situation.”

In a subsequent statement to RNZ, BOC said it was “working closely with global supply chains to secure more CO2 supplies.”

“Importing additional products would be costly, considering the costs of production, storage and delivery.”

The company said it had “already invested significant resources and capital in establishing an import supply chain since the closure of the Marsden Point refinery.”

“Unfortunately, we are unable to absorb the significant costs associated with importing additional CO2, so this week we informed our customers of a price adjustment for all CO2 products.”

“Ratios continue to be implemented and allocations are reviewed regularly in line with product availability,” it said.

Todd Energy said its own CO2 pricing for distributors has not changed, only the supply.

Oil and gas companies said they do not set market prices for CO2.

The safety issue that caused the shutdown was discovered during normal operational monitoring, the company said.

The company also said liquid CO2 is a by-product of natural gas production, so there was no impact on the employment of plant staff, who worked at other sites in the network during the shutdown.

Kapuni’s reopening date has yet to be determined.

Brewers fear unemployment and closures are imminent

Brewers Guild managing director Melanie Kees told RNZ that many members had received a letter from the BOC this week and were unsure how they could afford gas now.

“Many of New Zealand’s breweries are small businesses, so a significant price increase could cripple some of these businesses. We can’t always pass these costs on,” he said. Keyes said.

Melanie Keith, executive director of the Brewers Guild.
photograph: attached

“Both shortages and rising prices could result in suspending beer production or, in some cases, actually closing stores simply because they can’t access the CO2 they need.

“There was a person [brewers] If we can’t continue production, we’re talking about reducing staff hours. ”

Keith said there was a “ripple effect” from that.

“Some of these business owners may not only suffer from stress and mental health, but they may also lose their jobs,” she said.

“And of course the broader implications for the food, beverage and hospitality industry is remembering that CO2 is needed to pour beer in bars when it’s not being produced. This.”

This could also mean that less hops and malt are purchased from suppliers, Keys said.

“There are major companies involved in the supply chain. There are all kinds of businesses affected by shortages.”