Refining NZ Operational Update for March/April 2019

HIGHLIGHTS Continued strong operational performance with high hydrocracker throughput and good operational availability that led to refinery throughput of 7.31 million barrels. The Company earned NZD 50.1 million in Processing Fees for March/April. Refining NZ's Gross Refining Margin (GRM) was USD 6.63 per barrel, a strong uplift over the Singapore Dubai complex margin. Global refining margins recovered somewhat from the lows experienced during the January/February period although margins were constrained by the rise in crude oil prices. 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 March/April period; and - No recordable or lost time injuries since November 2018. Overall operating and capital costs have been controlled tightly versus budget, despite pressure from higher electricity prices. COMMENTARY Refining - Margins and throughput Sustained good hydrocracker throughput and excellent plant uptime combined with refinery throughput of 7.31 million barrels and a Gross Refinery Margin of USD 6.63 per barrel has seen the Company earn NZD 50.1 million in Processing Fees for March/April. The refinery achieved excellent Operational Availability of 99.9% during the March/April period. Global refining margins recovered somewhat from the lows experienced during the January/February period although margins were constrained by the rise in crude oil prices caused by geopolitical issues. Gasoline margins improved due to large stock draws in the USA and unplanned outages in Asia while lower Chinese diesel demand and increased diesel export quotas softened diesel margins. Asian fuel oil margins came under pressure due to high inflows from outside the region. The Singapore Dubai complex margin for the March/April period was USD 0.75 per barrel, impacted by the factors above and also by low naphtha margins. Refining NZ's March/April uplift over the Singapore Dubai complex margin was strong at USD 5.88 per barrel enabled by stable refinery operation, a balanced product slate and locational advantage. The average exchange rate for the March/April period was USD/NZD 0.68. Refinery throughput in the March/April period was healthy at 7.31 million barrels. This was impacted slightly by the natural gas supply shortfall resulting from on-going maintenance on the Pohokura offshore gas field facilities. The field operator now plans to complete the required maintenance and restore supply by the end of May. Refining NZ built its natural gas portfolio on the spot market and, as spot market prices were higher than Refining NZ's term gas contract, this had a negative impact on GRM of USD 0.11 per barrel for March/April. However, this remained preferential to firing more valuable liquid fuels. 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 March/April period and no recordable or lost time injuries since November 2018. Costs Overall operating and capital costs have been tightly controlled versus budget despite ongoing pressure from higher electricity prices. End CA:00334717 For:NZR Type:MKTUPDTE Time:2019-05-17 12:46:25