18 July 2017
Announcement to NZX Refining NZ Throughput and Margin Report for May/June 2017Refining NZ achieved a Gross Refinery Margin1) (GRM) of USD 7.63 per barrel for the May/June operating period and captured Processing Fee income of NZD 58.4 million, compared with NZD 43.3 million for the corresponding period last year.
Refining NZ's GRM has averaged USD 7.70 per barrel for the first half of 2017 generating Processing Fee income of NZD 152.5 million, NZD 37 million or 32% higher than the equivalent 2016 period.
Throughput for the May/June operating period was 7.8 million barrels, the highest on record due to 100% availability of all major process units and high customer utilisation. Continued high Auckland demand led to the highest on record quarterly jet fuel production in the second quarter.
Refinery to Auckland Pipeline throughput in the half-year to end June is the highest half-year on record. This demonstrates the timeliness of Refining NZ's investment decision to upgrade the pipeline's capacity, the first stage of which is currently being commissioned with the second stage expected later this year.
The Singapore Dubai complex margin for the May/June period was USD 2.90 per barrel and Refining NZ's uplift over the Singapore Dubai complex margin was strong at USD 4.73 per barrel.
The average exchange rate for the May/June period was USD/NZD 0.71.
Appendix I shows further information on throughput, margin and refining income.
Historical AnalysisA five year history of Throughput, Margins and Processing Fees is attached as Appendix II and can also be found on the company's website: www.refiningnz.com
1) Refining NZ's Gross Refining Margin is defined as the typical market value of the products produced minus the typical market value of the feedstock used, expressed per barrel of feedstock used. The margin incorporates the cost of the hydrocarbon used for fuel and incurred as process losses.
Appendix I - Year to date: 2017 Throughput, Margin and Refining Income Jan/FebThroughput | Barrels (million) | 7.16 | 6.58 |
Gross Refining Margin | USD (million) | 47.1 | |
Gross Refining Margin (excluding Floor/Cap) | USD (million) | 47.1 | 6.58 |
Interim Cap adjustment | NZD (million) | 0.0 | |
Processing Fee (after Floor/Cap) | USD (million) | 33.0 | 4.60 |
Processing Fee (excluding Floor/Cap) | NZD (million) | 45.9 | |
Processing Fee (after Floor/Cap) | NZD (million) | 45.9 |
Throughput | Barrels (million) | 5.14 | 9.35 |
Gross Refining Margin | USD (million) | 48.1 | |
Gross Refining Margin (excluding Floor/Cap) | USD (million) | 48.1 | 9.35 |
Interim Cap adjustment | NZD (million) | 0.0 | |
Processing Fee (after Floor/Cap) | USD (million) | 33.6 | 6.54 |
Processing Fee (excluding Floor/Cap) | NZD (million) | 48.1 | |
Processing Fee (after Floor/Cap) | NZD (million) | 48.1 |
Throughput | Barrels (million) | 7.76 | 7.63 |
Gross Refining Margin | USD (million) | 59.2 | |
Gross Refining Margin (excluding Floor/Cap) | USD (million) | 59.2 | 7.63 |
Interim Cap adjustment | NZD (million) | 0.0 | |
Processing Fee (after Floor/Cap) | USD (million) | 41.4 | 5.34 |
Processing Fee (excluding Floor/Cap) | NZD (million) | 58.4 | |
Processing Fee (after Floor/Cap) | NZD (million) | 58.4 |
Note: The GRM for a period may be above or below the Cap of USD 9.00 per barrel due to previous year price updates, which are not subject to the Floor/Cap in the current year
Explanatory Note ThroughputThroughput is the volume of feedstock intake, comprising crude oil, residues, natural gas and blendstock, measured in barrels. One barrel equates to approximately 159 litres.
Gross Refining MarginThe Gross Refining Margin is calculated in USD as the difference between the value of products and the cost of feedstock for each refining customer. The value of products use Singapore quoted prices adjusted for New Zealand quality and the cost of importing those products to New Zealand. Feedstocks are valued using the notional market values adjusted for the cost of getting the feedstock to the refinery. The Gross Refining Margin incorporates the cost of hydrocarbon used as fuel and incurred as process losses.
Typically, Refining NZ has an uplift over the Singapore complex margins of around USD 3.00 to 4.00 per barrel. The value of the uplift varies due to fluctuations in freight rates, product quality premia, crude market premia and operational performance. Product quality premia are the cost differentials between products made to New Zealand quality and products made to the quality that applies to quoted prices in Singapore. Crude market premia are the cost differences between the crude types actually processed at Refining NZ and Dubai (used as basis for the Singapore complex margins).
Margin Cap/Fee Floor AdjustmentThe processing agreements with our customers contain both Floor and Margin Cap clauses, both effective over a full calendar year.
The Fee Floor is the minimum Processing Fee due, for a calendar year, up to a current maximum of NZD 131 million. If the year-to-date Processing Fee is below the pro-rata Fee Floor, then an interim pro-rata Fee Floor payment is made by the Customers. Should the Processing Fee exceed the Fee Floor in future months any pro-rata Fee Floor payments that have been made are repaid to the Customers.
The Margin Cap limits the Gross Refining Margin for each customer to a maximum of USD 9.00 per barrel over the calendar year. Should the Gross Refining Margin fall below the Cap in future months any pro-rata Cap reductions that have been made are repaid by the Customers.
The Cap and the Floor are subject to year-to-date adjustments.
Any balance remaining at the end of the year cannot be carried over to the next year.
Gross Refining Margin after Cap/FloorThe Gross Refining Margin adjusted for any impacts of the Cap or Floor.
Processing FeeThe Processing Fee is 70% of the Gross Refining Margin after any adjustment for the Cap or Floor. The Processing Fee is paid by our customers in NZD.
Notes:
The information provided in this announcement relates to refining operations only. Revenue from pipeline or other activities is not included.
The Processing Fee results reported in this announcement are subject to change due to post announcement price updates and independent audit.
2013 | 2014 | 2015 | 2016 | 2017 | ||
Jan/Feb | Barrels 000's | 6,786 | 6,740 | 7,056 | 6,826 | 7,160 |
RNZ USD GRM per barrel 1) | 4.18 | 3.86 | 9.91 | 7.96 | 6.58 | |
Singapore Dubai Complex GRM | 3.45 | 0.70 | 5.40 | 4.95 | 3.42 | |
Uplift vs. Singapore Dubai Complex 3) | 0.73 | 3.16 | 4.51 | 3.01 | 3.16 | |
NZD Processing Fee (million) 2)4) | 23.7 | 22.0 | 59.6 | 57.0 | 45.9 | |
Mar/Apr | Barrels 000's | 7,151 | 6,146 | 7,411 | 7,471 | 5,140 |
RNZ USD GRM per barrel 1) | 5.03 | -2.84 | 8.77 | 1.84 | 9.35 | |
Singapore Dubai Complex GRM | 2.73 | 1.36 | 4.82 | 3.18 | 3.02 | |
Uplift vs. Singapore Dubai Complex 3) | 2.30 | -4.20 | 3.95 | -1.34 | 6.33 | |
NZD Processing Fee (million) 2) | 30.0 | 20.7 | 62.3 | 14.8 | 48.1 | |
May/Jun | Barrels 000's | 7,048 | 6,976 | 6,416 | 6,837 | 7,755 |
RNZ USD GRM per barrel 1) | 6.84 | 3.48 | 8.55 | 6.26 | 7.63 | |
Singapore Dubai Complex GRM | 2.92 | 0.10 | 4.24 | 2.13 | 2.90 | |
Uplift vs. Singapore Dubai Complex 3) | 3.92 | 3.38 | 4.31 | 4.13 | 4.73 | |
NZD Processing Fee (million) 2) | 41.8 | 21.1 | 48.9 | 43.3 | 58.4 | |
Jul/Aug | Barrels 000's | 7,194 | 6,298 | 7,519 | 6,833 | |
RNZ USD GRM per barrel 1) | 6.05 | 6.75 | 7.66 | 6.20 | ||
Singapore Dubai Complex GRM | 2.42 | -0.55 | 2.52 | 1.86 | ||
Uplift vs. Singapore Dubai Complex 3) | 3.63 | 7.30 | 5.14 | 4.34 | ||
NZD Processing Fee (million) 2) | 38.5 | 21.3 | 63.5 | 41.3 | ||
Sept/Oct | Barrels 000's | 6,730 | 6,388 | 7,221 | 7,251 | |
RNZ USD GRM per barrel 1) | 2.95 | 7.54 | 9.47 | 7.49 | ||
Singapore Dubai Complex GRM | -1.58 | 2.54 | 5.12 | 3.18 | ||
Uplift vs. Singapore Dubai Complex 3) | 4.53 | 5.00 | 4.35 | 4.31 | ||
NZD Processing Fee (million) 2) | 16.8 | 21.0 | 71.8 | 52.5 | ||
Nov/Dec | Barrels 000's | 5,693 | 7,127 | 7,017 | 7,447 | |
RNZ USD GRM per barrel 1) | 1.82 | 9.98 | 10.82 | 9.20 | ||
Singapore Dubai Complex GRM | -0.22 | 4.48 | 6.37 | 4.19 | ||
Uplift vs. Singapore Dubai Complex 3) | 2.04 | 5.50 | 4.45 | 5.01 | ||
NZD Processing Fee (million) 2) | 8.8 | 62.4 | 73.0 | 67.6 | ||
Total | Barrels 000's | 40,602 | 39,676 | 42,639 | 42,665 | 20,055 |
USD GRM per barrel 1) | 4.58 | 4.96 | 9.20 | 6.47 | 7.70 | |
NZD Processing Fee (million) 2) | 159.7 | 168.4 | 379.2 | 276.6 | 152.5 | |
YTD Cap adjustment NZD Processing Fee (million) 1) | 14.4 |
Excludes Fee Floor/Cap adjustment
Includes Fee Floor/Cap adjustment
RNZ uplift vs. Singapore Dubai Complex GRM i s in USD per barrel
Jan/Feb 2017 excludes a prior period adjustment of ($1.5m)
The New Zealand Refining Company Limited published this content on 18 July 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 17 July 2017 22:42:06 UTC.
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