Richard Tweedie


Richard Tweedie retired as managing director of Todd Energy in 2010 having taken the company on an incredible journey of growth and wealth creation over 23 years. During this time he significantly carved out a path to allow competition and commercial innovation to flourish in the upstream and downstream New Zealand energy sectors.

Tweedie studied law at Victoria University in Wellington and took his first job at Unilever.

Following this he worked at the Wellington Regional Employers’ Federation representing employers, particularly manufacturers in industrial law and work relations, later becoming president of the New Zealand Employers’ Federation.

After quickly gaining a reputation as an astute negotiator he was given the job of representing motor industry employers – a sizable industry of the day - against a combination of 13 trade unions.

Turning down job offers from a number of the large car assemblers he finally accepted a job working for Todd Motors as industrial relations manager in 1976 and later headed up the human resources function. He caught the attention of Sir Bryan Todd who then arranged for Tweedie to move to Todd Petroleum as a planning manager. He rose to managing director in 1987 - the first time a non-family member had been selected to head up a major business unit.

Resources interests refined in favour of energy

In the 1980s the Todd group had a number of interests in mining both in New Zealand and around the world including coal, gold and ironsands. It also had interests in forestry.

Its coal mine at Moody Creek on the West Coast was actually one of the first resources projects the company had elected to operate on its own, having always preferred to partner.

While seeing some promise in coal but also understanding some of the challenges, Tweedie made the call to progressively exit its mining interests in favour of building a domestic energy business.

With the subsequent deregulation, privatisation and corporatisation of the New Zealand energy sector, his timing couldn’t have been better.

He had just three staff at the start plus a secretary. Rodney Deppe’s role was to build discounted cashflow models with the Todd board asking the company to move away from historic cost valuations and towards net present values.

Todd Petroleum Mining had a 6.25 per cent stake in Maui and 25 per cent of Kapuni when Tweedie started.

Throughout his tenure, a combination of patience and tenacity would see the company take advantage of a dynamic commercial landscape. This included the various comings and goings of both international oil and gas companies, government-mandated sell-downs and the sale and split-up of Petrocorp.

BP exited Kapuni in 1991 and Todd increased its stake to 50 per cent. It acquired a 21 per cent stake in Maari in 1998 (which it later farmed down to 16 per cent) and then Pohokura in 2000. It acquired 100 per cent of McKee-Mangahewa in 2001.

More oil was being discovered at Maui, and Kapuni reserves were growing too. Originally there looked like there had been 25 years of gas at Kapuni, now it looked like there was another 25 years Everyone began looking hard at their gas supply contracts; it was a time too when the business environment had been changing, favouring competition under the new Commerce Act.

Early pre-reform moves pay off

Tweedie was credited with making early moves in the electricity generation and gas wholesaling sectors that pre-empted the government’s moves to open up these markets. And the first-mover advantage paid big dividends.

South of Kapuni, the Kiwi Dairies’ (now Fonterra) Hawera dairy plant is one of the largest in the world and a substantial energy user. Tweedie informed its management they were paying too much for gas from NGC, particularly given their proximity to Kapuni.

So the two companies embarked on a joint venture to build New Zealand’s first privately owned co-generation plant - a 65MW plant that could produce steam and electricity, taking advantage of steam demand in the summer dairy season and electricity demand during winter. It came with a price tag of $28 million.

But in 1995 ECNZ still saw itself as the sole electricity generator, and wasn’t happy with the plans. NGC still controlled all the gas and at the time they commenced the build Todd didn’t have a gas contract. The plant was going to produce 1 million tonnes of steam and consume 6PJ of gas per annum.

Tweedie had already seen that the market would be broken up and it was this foresight that convinced Kiwi Dairies to take the risk.

In 1996 Todd led the High Court action against NGC (partner Shell was reluctant) claiming a breach of section 27 of the Commerce Act for anti-competitive behaviour.

The judge concluded that NGC had breached section 27 and awarded Todd and Shell half of the gas from Kapuni, with the other half remaining with NGC. This was a significant pro-competition outcome for the sector and significant wealth creator for Todd.

If it hadn’t got the gas it would have had to buy it off NGC which would have been an economic disaster for the co-gen plant.

Electricity market changes present substantial opportunities

From the Kapuni decision and breaking up of the gas wholesale market, the electricity market was now also undergoing significant reform and Tweedie had Todd well positioned for this.

The break-up of ECNZ began presenting smaller hydro power stations for sale and in 1997 Todd acquired a stake in Mangahao, one of the first generation assets to be sold off.

It acquired electricity retail and generation business Bay of Plenty Energy (BoPE) in partnership with Pacific Hydro, which it eventually bought out. This was another important pillar of the vertical integration play.

BoPE wasn’t large but Tweedie liked the mix of assets and the 30,000-strong customer base. Generation included the Aniwhenua hydro power station, a co-gen plant at the Edgecumbe dairy factory and some geothermal.

The ‘Todd Energy’ brand was introduced in 1997 displacing Todd Petroleum Mining and better reflecting the company’s desire to be a vertically integrated energy company, “from drill bit to burner tip” Tweedie would say. By the year 2000 it was the third largest energy company in New Zealand.

Tweedie led the start-up of a new electricity retailer in 1999 – FreshStart - which grew rapidly to 40,000 customers in just two years. This was one of the first challengers in the post Electricity Industry Reform Act pro-competition era. It found itself owning an increasingly complex business and it sold FreshStart to Genesis Energy in 2003.

Back on top

In 2003 Todd increased its stake in Pohokura to 26 per cent when OMV sold its share down, another masterful piece of timing.

Tweedie was now leading the country’s largest oil and gas company again, through the rise and fall of Petrocorp and Fletcher Challenge Energy. As Todd gained experience and greater financial strength, it began to expand its operational and technical capacity, becoming an E&P company in its own right.

Nova Energy

Todd bought a 49 per cent stake in a promising landfill gas business in Wellington called Nova Energy that was looking to sell gas into TransAlta’s pipeline network. TransAlta responded defensively, prompting Tweedie to build a new gas pipeline network. This was a significant competition enabler, providing customers a choice of two gas pipelines. It later added LPG to this business and acquired 100 per cent of the company.

It acquired Otago Citigas off Dunedin City Council – an old coal-gas network that according to Tweedie leaked like a sieve. This was repaired and converted into a LPG network. In other firsts the company pioneered the use of containerised LPG bullets for rail carriages, and portable ISO containers for larger customers to support its growing nationwide LPG business.

Its customer acquisition strategy with large industrial gas users like Colgate Palmolive and Unilever in the Petone area was to offer a lower gas distribution charge in exchange for a 10-year gas supply contract. And this worked. The pipeline network was extended into Wellington, past Parliament and down Courtenay Place.

BoPE would be the battleground for a long-fought battle over competitor access to meters.

The Commerce Commission had said that Todd should provide competitors access to its electricity meters and took the case against Todd to court. Tweedie led the company’s defence, winning a lengthy battle that was seen as another win by a challenger new-entrant against the establishment.

In 2006 Todd defeated Shell's High Court bid to take over the operatorship of Maui from Shell-Todd Oil Services.

Tweedie saw the future for renewables as well, investing in solar hot water heating in 2007 and taking stakes in geothermal and more landfill gas projects to supplement its hydro assets. Tidal and wind projects were mooted.

Feared but respected

Tweedie’s style was to take the position of the underdog, the anti-establishment challenger and to never accept the status quo.

He learned the art of negotiation in his days representing manufacturers against powerful trade unions and went on to master this, becoming feared both in court and around the boardroom table.

On the subject of innovation and disruption Tweedie says that at his time at Todd the company was often seen as a bit different and people didn’t like that. "But if you're going to be successful you can't follow the crowd. You've got to be lateral and creative," he said. This was how he challenged the incumbents and achieved pro-competitive outcomes.

For seven straight years in the last decade, the company recorded returns on equity above 40 per cent and passed $1 billion in annual turnover.

The result is arguably the most vertically integrated energy business in the country, owning assets right across the supply chain from major upstream oil and gas assets, electricity generation, through to a retail gas and electricity business. He grew a balance sheet during his tenure from $200 million to over $4 billion creating a company on par with the largest indigenous energy companies across Australasia