Star Petroleum Refining : Management Discussion and Analysis Quarter 1 Ending 31 Mar 2021 (revised)

Management's Discussion and

Analysis of Financial Condition and Result of Operations For Quarter 1/2021

Star Petroleum Refining Public Company Limited

MD&A 1Q/2021

1. Company's Operating Result

(US$ Million)

Total Revenue

EBITDA

EBIT

Gain (Loss) on foreign exchange

Net income (Loss) Net income (Loss) (US$ per share)

Accounting gross refining margin (US$/barrel) (1)

Market gross refining margin (US$/barrel) (2)

Crude intake (thousand barrels/day)

Q1/21	Q4/20	+/(-)	Q1/20	+/(-)
1,213	1,064	149	1,256	(43)
107	60	47	(303)	410
84	37	47	(326)	410
(1)	6	(8)	7	(9)
66	29	37	(261)	327
0.02	0.01	0.01	(0.06)	0.08
10.67	6.45	4.22	(20.34)	31.02
3.53	3.88	(0.34)	1.28	2.25
137.1	135.2	1.9	153.1	(16.0)

(Baht Million)	Q1/21	Q4/20	+/(-)	Q1/20	+/(-)
Total Revenue	36,944	32,708	4,235	39,376	(2,432)
EBITDA	3,246	1,818	1,428	(9,622)	12,868
EBIT	2,560	1,119	1,441	(10,329)	12,889
Gain (Loss) on foreign exchange	(48)	193	(240)	242	(290)
Net income (Loss)	2,006	862	1,143	(8,273)	10,279
Net income (Loss)	0.46	0.20	0.26	(1.91)	2.37
(Baht per share)

1. margin includes inventory gain/loss based on weighted average inventory cost.
2. margin is calculated based on current replacement cost.

Exchange rate (Baht/US$)	Q1/21	Q4/20	+/(-)	Q1/20	+/(-)
Average FX	30.46	30.79	(0.33)	31.45	(0.99)
Closing FX	31.51	30.21	1.30	32.83	(1.32)

Crude oil price in Q1/21 continued to recover to a pre-pandemic level as a result of continuing production cut by OPEC and Saudi-Arabia. However, an ongoing of COVID-19 pandemic still caused to the reduction of global oil consumption for petroleum product in Q1/21 and resulted to continuing weak product crack spread. This lower demand has impacted to SPRC's operating performance in Q1/21 to lower production rates to meet the reduced consumption.

The continued escalation of the Coronavirus crisis has significantly impacted to the demand for petroleum products especially on Jet fuel and Diesel resulted in the reduction in SPRC refinery utilization rate in Q1/21 to the optimal level. Comparing Q1/21 and Q4/20, crude intake for Q1/21 was 137 thousand barrels per day, equivalent to 78% of the refining capacity, slightly higher than Q4/20 which was 135 thousand barrels per day. Despite the increase in crude intake, sale volume in Q1/21 was lower than Q4/20 as a result of the second round of COVID-19 spreading in Thailand. However, following an increase in oil prices in this quarter, sale revenue in Q1/21 was US$1,213 million, an increase of US$149 million.

The OPEC and Saudi Arabia rolled over the production cuts, a growing confidence in vaccine rollouts and the improvement in market sentiment caused the oil price increase and a significant gain in SPRC's EBITDA, EBIT and net earnings for Q1/21. NIAT for the quarter was gain of US$66 million comparing to gain of US$29 million in prior quarter. Accounting refinery margin in Q1/21 was significantly high at US$10.67/bbl comparing to US$6.45/bbl last quarter. Excluding the stock gain or loss impacted by the increase in oil price, market gross refining margin in Q1/21 slightly decreased from US$3.88/bbl in Q4/20 to US$3.53/bbl mainly due to weak demand in fuel oil. There was a slight exchange loss in this quarter from Baht depreciation against US$ while SPRC is still focusing in our operating expense control.

Star Petroleum Refining Public Company Limited

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MD&A 1Q/2021

Compared Q1/21 with Q1/20, sale revenue slightly decreased 3% as a result of lower sale volume due to low domestic oil consumption and demand during new emerging phase of COVID-19 pandemic in Q1/21. EBITDA, EBIT and net earnings in Q1/21 were positive from oil price climbing up which resulted in a significant stock gain while they were negative in Q1/20 from the oil price falling and resulted in a stock loss. Excluding stock gain or loss, Q1/21 market gross refining margin improved to US$3.53/bbl, comparing to US$1.28/bbl in Q1/20 due to lower crude premium and better crack spread on Mogas, Naphtha and Fuel Oil.

1. Market Condition

Pricing	Q1/21	Q4/20	+/(-)	Q1/20	+/(-)
Dubai crude oil	60.21	44.64	15.57	50.41	9.80
Light Naphtha (MOPJ)	62.08	45.38	16.70	48.59	13.49
Gasoline (premium)	67.41	48.75	18.66	56.95	10.46
Jet Fuel	63.44	47.06	16.37	58.87	4.57
Diesel	64.92	48.33	16.59	61.41	3.51
Fuel Oil	56.74	44.07	12.67	43.11	13.63

Spread over Dubai	Q1/21	Q4/20	+/(-)	Q1/20	+/(-)
Light Naphtha (MOPJ)	1.87	0.74	1.13	-1.82	3.69
Gasoline (premium)	7.19	4.11	3.09	6.54	0.66
Jet Fuel	3.22	2.42	0.80	8.46	-5.24
Diesel	4.70	3.69	1.02	11.00	-6.29
Fuel Oil	-3.47	-0.57	-2.90	-7.30	3.83

Average Dubai price for Q1/21 was US$60.21/bbl, which was increased from US$44.64/bbl in Q4/20. The significant oil price recovery was mainly supported by Saudi Arabia's decision to voluntarily cut the output by one million barrels per day in February and March as well as OPEC+'s decision to roll over March production targets into April. On the demand side, the bullish sentiment was largely due to progressive easing of movement restrictions following a successful vaccination rollout in the US and UK. That said, the gain in Dubai price was capped by some concerns on virus resurgence in some areas of Asia.

Gasoline spread over Dubai in Q1/21 increased significantly to US$7.19/bbl. Gasoline crack was supported by strong improvements in mobility indicators across various markets in Asia including Japan and Indonesia. These markets have managed to lower their infection rates and in particular Japan's infection rate has declined to a level previously seen in November. In addition, India's driving activities continued to increase while Australia's summer season remained supportive of the gasoline market despite a brief lockdown in Victoria. Global light distillate inventory levels in 5 key areas were below 5-year low levels in the second half of the quarter while Singapore inventories remained between 5- year highs and lows throughout Q1/21.

Naphtha spread over Dubai in Q1/21 rose to US$1.87/bbl. The rally in Asian naphtha market was underpinned by the return of cracking capacity from turnarounds in North Asia. Offline cracking capacity eased from 5.1 mmtpa in December to about 3.1 mmtpa in January. Another bullish sentiment was the higher demand for naphtha feedstock to replace the costlier LPG feedstock for olefin cracking while olefins margins also remained high. Nonetheless, the naphtha crack was pressured by the influx of arbitrage volumes and demand loss from cracker outage in Japan due to the earthquake in February.

Jet and diesel crack spreads over Dubai increased from previous quarter to be US$3.22/bbl and US$4.70/bbl respectively. The rise in jet crack was supported by heating oil demands in Japan and South Korea in January and February and higher scheduled domestic flights in the second half of February in Mainland China and India. However, in March, increased production of middle distillates and reduced demand for winter heating oil have pressured the jet fuel market. In addition, the virus resurgence in India has also dampened consumer sentiment, pressuring domestic demand. Diesel cracks strengthened in January and February as demand from industrial and manufacturing activities remained robust. The PMI readings from most of the major manufacturing hubs were firmly in an expansionary mode. However, in March, strong exports from mainland China and India have depressed the markets. Excess production resulting from lower demand than anticipated during the Lunar New Year period and the slowdown in India owing to higher infection rates have contributed to the length in the market. Global middle distillate inventory levels in 5 key areas are between 5-year

Star Petroleum Refining Public Company Limited

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MD&A 1Q/2021

highs and lows while Singapore inventories remained above 5-year highs throughout Q1/21.

Fuel oil spread over Dubai in Q1/21 was -US$3.47/bbl, which was lower than Q4/20. This was mainly impacted by lower demands in shipping after the holiday season. Singapore onshore fuel oil inventories increased by 6% Q-o-Q to 23.2 million barrels.

Due to higher crude premiums, SPRC's average market refining margin in Q1/21 was US$3.53/bbl, which is slightly lower, as compared to US$3.88/bbl in Q4/20. In Q1/21, SPRC captured margin by maximizing light crude to maximize gasoline production, restarting minimum jet production, optimizing crude throughput to meet domestic demand as well as producing higher value products such as on grade DSR asphalt and decant oil as carbon black feedstock.

3)	Financial Results
			US$ Million		US$ Million
		Q1/21	Q4/20	+/(-)	Q1/20	+/(-)
Total Revenue	1,213	1,064	149	1,256	(43)
Cost of sales	(1,120)	(1,031)	(90)	(1,582)	461
Gross profit (Loss)	93	34	60	(325)	418
Other income	0	1	(1)	0	0
Gain on exchange rate	8	3	5	7	1
Fair value gain (Loss) on derivatives	(10)	3	(13)	0	(10)
Administrative expenses	(8)	(4)	(4)	(8)	0
Finance costs	(2)	(1)	(0)	(2)	(0)
Income tax	(17)	(7)	(9)	66	(83)
Net income (Loss)	66	29	37	(261)	327
			Baht Million		Baht Million
		Q1/21	Q4/20	+/(-)	Q1/20	+/(-)
Total Revenue	36,944	32,708	4,235	39,376	(2,432)
Cost of sales	(34,111)	(31,700)	(2,412)	(49,701)	15,590
Gross profit (Loss)	2,832	1,009	1,824	(10,325)	13,158
Other income	13	38	(25)	13	0
Gain on exchange rate	256	99	157	242	14
Fair value gain (Loss) on derivatives	(304)	94	(398)	0	(304)
Administrative expenses	(238)	(120)	(117)	(258)	20
Finance costs	(53)	(45)	(7)	(52)	(1)
Income tax	(501)	(211)	(290)	2,108	(2,609)
Net income (Loss)	2,006	862	1,143	(8,273)	10,279

Star Petroleum Refining Public Company Limited

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MD&A 1Q/2021

Production Volumes
		Thousands barrels
Petroleum products	Q1/21	Q4/20	Q1/20
Polymer Grade Propylene	444	435	361
Liquefied Petroleum Gas	648	613	636
Light Naphtha	759	836	760
Gasoline	3,913	4,215	3,890
Jet Fuel	311	22	1,222
Diesel	5,123	5,664	6,183
Fuel Oil	477	418	1,010
Asphalt	144	137	126
Mix C4	571	503	520
Other (1)	1,085	997	1,111
Total production	13,474	13,839	15,820

(1) Includes sulfur and reformate and products sold pursuant to our cracker feed exchange with PTT Global Chemical (PTTGC).

Total Sale Revenue
			US$ Million
Petroleum products (1)	Q1/21	Q4/20	Q1/20
Polymer Grade Propylene	37	32	22
Liquefied Petroleum Gas	33	25	28
Light Naphtha	47	40	35
Gasoline	411	360	356
Jet Fuel	13	0	81
Diesel	522	499	601
Fuel Oil	25	23	40
Asphalt	11	6	4
Mix C4	42	29	26
Crude	0	0	10
Others (2)	72	52	54
Total Revenue	1,213	1,064	1,256

1. Includes Government LPG and oil subsidies.
2. Includes sulfur, reformate and products sold pursuant to our cracker feed exchange with PTT Global Chemical (PTTGC).

Sale revenue in Q1/21 increased 14% from Q4/20 mainly from the increase in average oil price during Q1/21 comparing to Q4/20, partly offset with a decrease in sale volume in Q1/21 to 13.7 million barrels from 14.9 million barrels in Q4/20 due to the reduction in oil consumption from the new emerging phase of COVID-19 impacts.

Q1/21 sale revenue slightly decreased 3% compared to Q1/20 from a decrease in sale volume in Q1/21 decreased to

13.7 million barrels from 16.4 million barrels in Q1/20 especially lower demand of Diesel and JET from an ongoing of COVID-19 pandemic partly offset with higher selling price.

In Q1/21, the company sold its petroleum products based on sale revenue to Chevron, PTT&PTTOR and other oil and petrochemical companies in the proportion of 46%, 37% and 17%, respectively.

Cost of Sales

Comparing cost of sale for Q1/21 with Q4/20, cost of sale increased 9%. The increase was in line with the increase in oil price despite lower sales volume comparing to Q1/20.

Star Petroleum Refining Public Company Limited

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