Refinery Simplification Update

NZX announcement
17 December 2020

Refinery Simplification Update

Refining NZ advises that Z Energy has issued a notice of dispute under its Processing Agreement
with Refining NZ in relation to Refining NZ’s plans to simplify the Marsden Point oil refinery
operations.

Refining NZ has also issued a notice of dispute under the Processing Agreement to Z Energy in
relation to a separate claim by Refining NZ that the Fee Floor should be $70M per annum higher.

As advised in previous announcements, Refining NZ has developed plans to enable it to continue
to operate the refinery in 2021 at the lowest cost possible and run cash neutral, maintaining
reliable fuel supply for the New Zealand market while continuing to meet its obligations under
the Processing Agreement.

Under the terms of the Processing Agreement, customers take the risk of periods of low margins
and demand through the Fee Floor structure which provides a fixed amount of revenue to
Refining NZ, independent of actual throughput.

Refining NZ’s simplification plans result in the refinery returning to similar overall capacity levels
as existed at the time the Fee Floor was set on commencement of the Processing Agreement.
Refining NZ is confident that its simplification plan complies with the terms of the Processing
Agreement and intends to continue to act within the terms of this agreement while working
through the dispute resolution process with Z Energy for both disputes. Refining NZ is discussing
with Z Energy its assertion that it intends to withhold payment of the Fee Floor pending
resolution of the dispute.

Refining NZ has made good progress in discussions with other customers in relation to the
potential future staged transition to an import terminal and these discussions
continue. Refining NZ expects to provide an update to the market in January regarding its work
to further develop and refine import terminal conversion plans , including estimated costs of
conversion and timing and the status of ongoing customer discussions. The independent
directors, who have been overseeing discussions with customers, continue to see significant
unrealised value in Refining NZ’s infrastructure.
Authorised by:
Chris Bougen
General Counsel and Company Secretary

NZX announcement


For further information:
Ellie Martel
Government and External Affairs Manager
Ellie.Martel@refiningnz.com

+64 (0)20 4174 7226