New Zealand Refining : Refining NZ Operational Report - July/August

NZX announcement

21 September 2020

Refining NZ Operational Update for July/August 2020

COMMENTARY

Refining NZ's excellent health and safety performance continued through July and August, with no Tier 1 or Tier 2 process safety events or recordable cases. Refining NZ promptly addressed the causes of two releases outside of consent that occurred.

The refinery was shut down for six weeks during the period in order to help rebalance stocks across the country, due to the COVID-19 impacts on New Zealand fuel demand. All processing units have now been safely restarted and are expected to operate in low production mode to the end of the year.

Refinery to Auckland Pipeline (RAP) throughput was approximately 62% of the previous corresponding period, reflecting the continuing impact of international border restrictions on jet demand and the impact of recent COVID-19 lockdown restrictions on Auckland fuel demand. International markets remain heavily impacted by the effects of COVID-19with increased global demand during July and August as lockdown restrictions were eased in many countries, offset by the ramp-upof exports from China and India causing the Singapore Dubai Complex Margin for

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NZX announcement

the July/August period to average US$ -2.46 per barrel. Refining NZ's GRM uplift over the Singapore margin was negative due to the temporary shutdown of the refinery.

Processing Fee revenue was NZ$23.7 million, reflecting Fee Floor payments by our customers. GRM for the two months was US$ -4.18 per barrel reflecting low margins and low production during the period and the fuel and loss impact of the shutdown and restart of the refinery. In addition, the Company earned NZ$4.3 million in terminal fees from the import of petrol and diesel to Marsden Point during the temporary shutdown.

The Company continues to expect Processing Fees to remain at the Fee Floor through 2H 2020, given Fee Floor payments year to date total NZ$70.4 million (with Processing Fee Revenue excluding Fee Floor payments of NZ$23.3 million).

Net debt was NZ$249 million at the end of August, reflecting five months of cash neutral operations at the Fee Floor.

Refining NZ is now in the final stages of planning to simplify refinery operations and structurally reduce operating costs, in order to extend cash neutral operations in 2021 under a Fee Floor scenario. The Company remains on track to provide a market update on the simplification plans in early October.

For further information: Ellie Martel

Government and External Affairs Manager [e-mail]

[phone]

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NZX announcement

OPERATIONAL DATA

Jul/Aug	Jul/Aug	YTD	FY
2020	2019	2020	2019

Health, Safety &

Environment

LTI

LTIF

TRC

TRCF

Tier I Process Safety Events Tier II Process Safety Events Releases outside of consent

#	0	1	0	1
#/200,000hr	-	-	0.00	0.13
s
#	0	1	0	2
#/200,000hr	-	-	0.17	0.27
s
#	0	0	0	0
#	0	0	0	0
#	2	0	3	1

Refining

Brent Crude Oil Price Exchange Rate Operational availability Unplanned process downtime Refining throughput

Gross Refining Margin

Gross Refining Margin (including Fee Floor/Margin Cap) Processing Fee (including Fee Floor/Margin Cap)

Processing fee (including Fee Floor/Margin Cap)

Distribution

RAP throughput

US$/bbl

US$/NZ$

%

%

Mbbl

US$/bbl US$M

US$M

NZ$M

Mbbl

44.1	61.5	40.8	64.4
0.66	0.66	0.63	0.66
99.5	99.8	97.4	99.7
81.2	0.0	33.2	1.6
1.77	7.42	17.20	42.69
-4.18	7.10	1.20	5.34
22.3	52.7	85.0	227.9
15.6	36.9	59.5	159.5
23.7	56.2	93.7	242.0

2.1 3.4 9.7 20.8

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HISTORICAL INFORMATION - REFINING

	Appendix II 2020
Jan/Feb	Barrels 000's
	RNZ USD GRM per barrel 1)
	Singapore Dubai Complex GRM
	Uplift vs . Singapore Dubai Complex 3)
	NZD Processing Fee (million) 2)
Mar/Apr	Barrels 000's
	RNZ USD GRM per barrel 1)
	Singapore Dubai Complex GRM
	Uplift vs . Singapore Dubai Complex 3)
	NZD Processing Fee (million) 2)
May/Jun	Barrels 000's
	RNZ USD GRM per barrel 1)
	Singapore Dubai Complex GRM
	Uplift vs . Singapore Dubai Complex 3)
	NZD Processing Fee (million) 2); 5)
Jul/Aug	Barrels 000's
	RNZ USD GRM per barrel 1)
	Singapore Dubai Complex GRM
	Uplift vs . Singapore Dubai Complex 3)
	NZD Processing Fee (million) 2)
Sept/Oct	Barrels 000's
	RNZ USD GRM per barrel 1)
	Singapore Dubai Complex GRM
	Uplift vs . Singapore Dubai Complex 3)
	NZD Processing Fee (million) 2)
Nov/Dec	Barrels 000's
	RNZ USD GRM per barrel 1)
	Singapore Dubai Complex GRM
	Uplift vs . Singapore Dubai Complex 3)
	NZD Processing Fee (million) 2)
Total	Barrels 000's
	USD GRM per barrel 1)
	NZD Processing Fee (million) 2)
	YTD Cap adjustment
	NZD Processing Fee (million) 1)

2016	2017	2018	2019	2020
6,826	7,160	7,011	6,963	6,909
7.96	6.58	7.54	4.88	1.04
4.95	3.42	3.37	-0.32	-1.58
3.01	3.16	4.17	5.20	2.62
57.0	45.9	50.8	34.9	23.0
7,471	5,140	6,958	7,312	4,656
1.84	9.35	6.82	6.63	0.67
3.18	3.02	3.75	0.75	0.19
-1.34	6.33	3.07	5.88	0.48
14.8	48.1	45.8	50.1	23.7
6,837	7,755	3,910	6,945	3,867
6.26	7.63	0.18	4.36	4.59
2.13	2.90	2.02	0.17	-3.78
4.13	4.73	-1.84	4.19	8.37
43.3	58.4	0.7	32.2	23.3
6,833	7,511	7,615	7,419	1,766
6.20	8.87	6.86	7.10	-4.18
1.86	4.70	2.57	3.23	-2.46
4.34	4.17	4.29	3.87	-1.73
41.3	63.6	54.3	56.2	23.7
7,251	6,816	7,639	7,245
7.49	9.31	7.09	6.16
3.18	4.73	2.47	3.55
4.31	4.58	4.62	2.61
52.5	62.2	57.8	49.3
7,447	7,342	7,307	6,803
9.20	6.83	6.53	2.62
4.19	3.67	1.80	-1.55
5.01	3.16	4.73	4.16
67.6	50.7	49.2	19.2
42,665	41,724	40,440	42,687	17,198
6.47	8.02	6.31	5.34	1.20
276.6	328.9	258.7	242.0	93.7

1. Excludes Fee Floor/Cap adjustment
2. Includes Fee Floor/Cap adjustment
3. RNZ uplift vs . Singapore Dubai Complex GRM is in USD per barrel

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