Refining NZ Operational Update for January/February 2019

HIGHLIGHTS Strong operational performance marked by record hydrocracker throughput and 100.0% operational availability led to refinery throughput of 6.96 million barrels. The Company earned NZD 34.9 million in Processing Fees for January-February. Refining NZ's Gross Refining Margin (GRM) was USD 4.88 per barrel, a very strong uplift over the Singapore Dubai complex margin which was negative during the period, as a result of weak gasoline prices. Gasoline margins were as low as negative USD 2 per barrel during the January-February reporting period but have strengthened to almost USD 6 per barrel since the period. Volumes of products delivered through the refinery to Auckland pipeline remained strong. Outstanding process and personal safety performance was achieved: - No Tier 1 or Tier 2 process safety events in the January/February period; and - No recordable or lost time injuries since November 2018. Overall operating and capital costs have been controlled tightly versus budget. COMMENTARY Refining - Margins and throughput Record hydrocracker throughput and excellent plant uptime combined with refinery throughput of 6.96 million barrels and a Gross Refinery Margin of USD 4.88 per barrel has seen the Company earn NZD 34.9 million in Processing Fees for January-February. Global refining margins were low during the January/February period, impacted mostly by gasoline margins which were as low as negative USD 2 per barrel in Singapore versus the Dubai crude price. The Singapore gasoline margin (which directly impacts Refining NZ's Processing Fee income) recovered to over USD 1 per barrel by the end of the January/February period and is currently just under USD 6 per barrel. This recovery has been driven by strong South- and South-East Asian demand, significant refinery maintenance and falling US gasoline stocks. The Singapore Dubai complex margin for the January/February period was negative USD 0.32 per barrel, impacted mostly by gasoline margins. However, Refining NZ's January/February uplift over the Singapore Dubai complex margin was very strong at USD 5.20 per barrel. Refining NZ's balanced product slate and locational advantage enabled it to achieve a strong margin uplift notwithstanding global pressure on gasoline margins. The average exchange rate for the January/February period was USD/NZD 0.68, the same as the November/December 2018 period. Refinery throughput of 6.96 million barrels in the January/February period was impacted slightly by delays in some crude shipments and by reduced natural gas usage due to the gas supply shortfall currently being experienced in New Zealand. The Pohokura offshore gas field operator plans to complete required maintenance by the end of April to restore supply. Nevertheless, Refining NZ continues to build a gas portfolio and will make up any shortfall through firing of liquid fuels. It does not expect any material impact on the Company. The refinery enjoyed excellent uptime of 100.0% during the January/February period and a new hydrocracker throughput record was set which supported production of higher margin jet fuel and diesel. Distribution - Refinery to Auckland Pipeline Pipeline operational availability was high and volumes of products delivered through the pipeline remained strong. Health, safety and environment Process and personal safety performance were outstanding with no Tier 1 or Tier 2 process safety events in the January/February period and no recordable or lost time injuries since November 2018. Other Overall operating and capital costs have been tightly controlled versus budget despite pressure from higher electricity prices. Site construction on the sulphur solidification plant has commenced and is due to be finished before the end of the year. Refining NZ's tank maintenance programme continues with the use of robotic technology shortening the expected duration. End CA:00332153 For:NZR Type:MKTUPDTE Time:2019-03-19 11:03:07