Channel Infrastructure Locks in $130M bp Contract Over 15 Years From Q3 2028
Key Takeaways
- Channel Infrastructure has signed a 15-year contract with bp for jet and diesel fuel storage at the Marsden Point Energy Precinct, expected to generate ~$130 million in revenue over the initial term before PPI indexation.
- Revenue commences Q3 2028 following project completion, with tank repurposing work starting September 2026 and ~$65–70 million in growth capex deployed across 2026–2028.
- The entire capital investment is funded through existing debt facilities, avoiding any equity dilution for shareholders.
- Channel has grown in-service contracted storage at Marsden Point by 40% over the past three months, with more than 350 million litres of tank capacity still available for repurposing.
- The infrastructure-style revenue model is insulated from commodity price swings — Channel is paid for storage capacity, not fuel volumes or margins — with inflation protection built in via PPI indexation.
Channel Infrastructure has secured a 15-year contract with bp for additional jet and diesel fuel storage at the Marsden Point Energy Precinct. The contract is expected to generate ~$130 million of revenue over the initial 15-year term (prior to PPI indexation), with revenue commencing Q3 2028. Work to repurpose tanks begins September 2026, with project completion targeted Q3 2028. This is contracted, long-dated revenue underpinning earnings visibility into the next decade.
Channel expects to invest approximately $65–70 million of growth capital expenditure across 2026 to 2028 to repurpose existing tanks and associated infrastructure for the new storage. The investment will be funded through existing debt facilities. The company will also invest an additional $0.7 million to $0.9 million per annum in operating expenditure to support resilient import terminal operations and the execution of its growth pipeline.
Inside the contract — revenue, capex and timelines
The commercial mechanics of the bp contract are straightforward. Revenue materially exceeds the upfront capital requirement, and the project is funded from existing debt facilities rather than new equity.
| Metric | Detail | Timing/Notes |
|---|---|---|
| Contract term | 15 years | Commences Q3 2028 |
| Expected revenue | ~$130m | Over initial term (before PPI indexation) |
| Revenue start | Q3 2028 | Following project completion |
| Growth capex | ~$65–70m | Deployed 2026–2028 |
| Funding source | Existing debt facilities | Supports terminal operations and growth pipeline |
| Additional opex | $0.7m–$0.9m per annum | Supports terminal operations and growth pipeline |
The capex is for repurposing existing tanks and associated infrastructure, not greenfield build. That reduces execution risk and cost. Revenue of ~$130 million materially exceeds the upfront capex of ~$65–70 million, and the contract is funded through existing debt facilities rather than new equity.
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A 40% storage expansion and a growing pipeline
Over the last three months, Channel has increased in-service contracted storage at Marsden Point by 40%. The new bp contract adds to this expansion. The additional $0.7 million to $0.9 million per annum opex is investment to support resilient import terminal operations and execution of the growth pipeline.
Channel’s strategic footprint positions it as critical infrastructure in New Zealand’s fuel supply chain:
- New Zealand’s largest fuel import terminal — stores and distributes 40% of NZ’s transport fuel, including 80% of jet fuel
- More than 410 million litres of contracted storage on site
- 170-kilometre pipeline to Auckland
- Customers: bp, Mobil and Z Energy
Rising contracted storage means higher recurring, infrastructure-style revenue. This contract is evidence of that conversion happening in real time.
Why fuel storage infrastructure matters
A fuel import terminal business receives, stores, tests and distributes imported fuel under long-term contracts with fuel majors. That model generates predictable, inflation-linked cash flows — note the PPI indexation in this contract — which makes it infrastructure-like in character. Long-dated, contracted storage revenue is attractive because it is not exposed to commodity price swings. What you are paid for is capacity, not volume or margin on the fuel itself. This contract converts spare tank capacity into contracted, indexed revenue with minimal build risk. The tanks already exist.
Repurposing capacity for the energy transition
Channel has more than 350 million litres of tank capacity available for repurposing to finished product storage. A further 45 hectares of consented, freehold land is available for greenfields fuel storage projects. The company references the Marsden Point Energy Precinct Concept and its positioning to support the renewable fuel transition and lower-carbon future fuels.
Beyond Marsden Point, Channel holds diversification assets: a 25% interest in the Somerton jet fuel pipeline to Melbourne Airport, and subsidiary Independent Petroleum Laboratory Limited, which provides fuel quality testing services throughout New Zealand.
Today’s contract demonstrates the repurposing strategy in action, with substantial remaining capacity for future contracts.
What it means for investors
This is a long-dated (15-year), PPI-indexed contract adding earnings visibility from Q3 2028. Execution risk is low because the project repurposes existing infrastructure and is funded from existing debt facilities. The company has delivered a 40% storage expansion in three months and now secured this material contract. That momentum signals a broader growth pipeline still to be converted.
Over the last three months, Channel has increased in-service contracted storage at Marsden Point by 40%.
The revenue outweighs the capex, the funding structure avoids dilution, and the infrastructure-style cash flows carry inflation protection. This is what converting spare capacity into contracted earnings looks like.
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Key dates and next steps
The timeline ahead is clear:
- September 2026 — tank repurposing work commences
- 2026–2028 — ~$65–70m growth capex deployed
- Q3 2028 — project completion targeted and contract revenue commences
Channel’s ability to sign long-term contracts with fuel majors while maintaining substantial repurposing capacity positions it to continue converting strategic assets into recurring, indexed revenue streams.
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