Release of Materials for Vote on Import Terminal Conversion

Notice of Special Meeting
The New Zealand
Refining Company
Limited
The meeting will be held at:
TIME: 11.00am (New Zealand time)
SCHEDULED DATE: Friday 6th August 2021
PLACE: World Cup Lounge East Room,
Level 4, South Stand, Eden Park, Reimers Ave,
Kingsland, Auckland and virtually through
Lumi using the login details explained in this
Notice of Meeting.

1

The New Zealand Refining Company Limited Notice of Special Meeting
Notice is hereby given that a special meeting of The New Zealand Refining Company Limited
(“Company” and “Refining NZ”) will be held at 11.00am on Friday 6th August 2021, at World Cup
Lounge East Room, Level 4, South Stand, Eden Park, Reimers Avenue, Kingsland, Auckland.
You can also attend the meeting virtually using the instructions explained further below under
“Virtual Meeting”.
Capitalised but undefined terms in this Notice of Meeting carry the same meaning as in the
Glossary of the Booklet accompanying this Notice of Meeting.
Key Dates
If you do not wish to attend, but would like to vote, you
must submit your Proxy/Voting Form or online vote no
later than 11:00am on Wednesday 4th August 2021, in
accordance with the instructions at the back of this Notice
of Meeting and the Proxy/Voting Form.
Business
This is a significant Meeting for the future of the Company
as shareholders will be asked to approve the conversion
of the Company’s business from an oil refinery to an
import terminal.
Important information to help you decide how to vote on
these Resolutions is set out in the Booklet accompanying
this Notice of Meeting. You are encouraged to read the
Booklet in full before deciding how to vote.
Independent Directors’
Recommendation
The Independent Directors recommend that shareholders
vote in favour of all Resolutions before the Meeting.
Presentations
• Chairman’s Address.
• CEO’s Address.
Resolutions
Resolution 1: Change in nature of business and
major transaction
To consider and, if thought fit, to pass the following as a
special resolution:
“That the Proposal is approved for the purposes of NZX
Listing Rule 5.1.1(a) and, to the extent applicable, NZX
Listing Rule 5.1.1(b) and section 129 of the Companies Act
1993, subject to the Approval Requirements.”
Resolution 2: Provision of import terminal
services
To consider and, if thought fit, to pass the following as an
ordinary resolution subject to Resolution 1 being passed:
“That Refining NZ’s entry into documentation with each
of the Customers (or their nominees) for the provision of
import terminal services and transitional arrangements
from the Processing Agreements, is approved as a Material
Transaction under NZX Listing Rule 5.2.1.”
By order of the Board
Chris Bougen
General Counsel and Company Secretary
5th July 2021

The New Zealand Refining Company Limited Notice of Special Meeting

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Explanatory Notes – Resolutions
In order for the Proposal to be implemented, amongst other Approval Requirements,
Resolutions 1 and 2 must be approved by shareholders.
Change in nature of business and major transaction
Resolution 1 is being put to shareholders in accordance
with the requirements of the NZX Listing Rules and the
Companies Act 1993 in connection with the entry into and
performance of the Proposal. The Proposal is defined in
the Booklet as carrying out the Conversion and carrying on
the New Business. Each of these are described in detail in
the Booklet.
The NZX Listing Rules provide that Refining NZ must
obtain the approval of shareholders to enter into any
transaction, or related series of transactions, under which
Refining NZ acquires or disposes of assets (including
contracts for the provision of import terminal services
and transitional arrangements from existing Processing
Agreements) where the transactions would:
(a) significantly change, either directly or indirectly, the
nature of Refining NZ’s business; or
(b) involve a ‘Gross Value’ above 50% of the Average
Market Capitalisation of Refining NZ.
As the Proposal would result in Refining NZ ceasing to
operate an oil refinery business, being its main activity,
and is of a value that exceeds the threshold in (b) above,
shareholders’ approval under NZX Listing Rules 5.1.1(a) and
5.1.1(b) is being sought.
In addition to the above approval under the NZX Listing
Rules, section 129 of the Companies Act 1993 also
provides that Refining NZ must obtain approval of
shareholders to enter into any transaction that:
(a) involves Refining NZ disposing of assets the value of
which is more than half the market value of Refining
NZ’s gross assets before the disposition; or
(b) is likely to have the effect of Refining NZ acquiring
rights or incurring obligations or liabilities the market
value of which is more than half the market value of
Refining NZ’s gross assets before the transaction.
As the Proposal involves the staged cessation of refinery
activities ultimately resulting in the repurposing or
decommissioning, demolition and remediation of refining
assets and land, the Restructure, and the acquisition of
rights (under documents recording the provision of import
terminal services and transitional arrangements) and the
incurring of expenses associated with the Conversion,
the value of which (in either case) is more than half of
the market value of Refining NZ’s gross assets before the
implementation of the Proposal, Refining NZ must first
obtain shareholders’ approval under section 129 of the
Companies Act 1993 before implementing the Proposal.
Resolution 1 is a special resolution. To be passed, this
Resolution requires the approval of a majority of 75% of the
votes cast by shareholders entitled to vote and voting.
RESOLUTION 1

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The New Zealand Refining Company Limited Notice of Special Meeting
Provision of import terminal services
Resolution 2 is being put to shareholders in accordance
with the requirements of the NZX Listing Rules for
Material Transactions with Related Parties, under NZX
Listing Rule 5.2.1.
As explained in the Booklet (see Section 2.4), the final
form of the Terminal Services Agreements (TSA) and
Transition Agreements with Customers are yet to be
concluded. Therefore, shareholders are being asked
to approve the provision of import terminal services
to Customers and transitional arrangements from the
provision of oil refining services under the existing
Processing Agreements, on the basis of the terms
set out in Section 2.4 of the Booklet. If the Resolution
is approved, Refining NZ will then aim to conclude
negotiations accordingly.
The NZX Listing Rules require shareholders to approve
any Material Transaction directly between Refining NZ
and a Related Party. The provision of import terminal
services and transitional arrangements are ‘Material
Transactions’ as:
(a) in relation to the services provided, the gross cost to
Refining NZ in any financial year is likely to exceed an
amount equal to 1% of Refining NZ’s Average Market
Capitalisation; and
(b) in relation to the rights acquired by Refining NZ under
the documents for the provision of import terminal
services, the market value of those rights exceeds
10% of Refining NZ’s Average Market Capitalisation.
Further, the transitional arrangements from the Processing
Agreements may constitute material variations to existing
material transactions with Related Parties (that is, the
existing Processing Agreements).
Each of the Customers is a Related Party of Refining NZ
as each of them has a relevant interest in 10% or more of
the Shares in Refining NZ.
An Independent Appraisal Report on the fairness of
the terms for the provision of import terminal services
and transitional arrangements to shareholders that are
not Associated Persons of the Customers is set out
in Appendix A of the Booklet. The Independent
Appraiser considers those transactions to be fair to
such shareholders.
Resolution 2 is an ordinary resolution. To be passed, this
Resolution requires the approval of a simple majority
of the votes cast by shareholders entitled to vote and
voting (which excludes the votes of Customers and their
Associated Persons cast in favour of Resolution 2).
See “Voting entitlements and disqualifications” below
for information on those shareholders entitled to vote on
Resolution 2.
RESOLUTION 2

The New Zealand Refining Company Limited Notice of Special Meeting

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Voting entitlements and
disqualifications
Provided that they are registered as holding Shares on
Refining NZ’s share register at 11.00am on Friday 6th
August 2021 (being the Record Date), shareholders will
be entitled to vote at the Meeting as follows:
(a) Resolution 1: all shareholders are entitled to vote;
and
(b) Resolution 2: all shareholders are entitled to vote,
except each of the Customers (and their
Associated Persons).
How shareholders may cast votes
Shareholders may cast their vote in one of three ways:
(a) Personal Attendance
You can attend the meeting in person or participate
virtually via an online platform web.lumiagm.com
provided by the Company’s share registrar,
Computershare Investor Services Limited.
(b) Appointment of a Proxy
A shareholder entitled to attend and vote at the Meeting
is entitled to appoint a proxy to attend and vote instead of
the shareholder. A proxy need not be another shareholder.
A shareholder may appoint “The Chairman of the Meeting”
as proxy. The Chairman intends to vote any undirected
proxies held by him in favour of Resolutions 1 and 2.
If you have ticked the “PROXY DISCRETION” box and
your named proxy does not attend the Meeting or you
have not named a proxy but have otherwise completed
the Proxy/Voting Form in full, the Chairman of the Meeting
will act as your proxy. With respect to any other direction
the Proxy/Voting Form will take effect as a postal vote.
The Chairman’s voting intentions are set out in the
paragraph above, and it is noted that he is not subject to
any voting restrictions.
As noted under “Voting entitlements and
disqualifications” the Customers (and their Associated
Persons, including the Customer Directors) are
disqualified from voting on Resolution 2 under the NZX
Listing Rules. Therefore, any such persons may only act
as proxies in respect of Resolution 2 in accordance with
express instructions of the shareholder appointing them
as a proxy (i.e. discretionary proxies given to a Customer
(or their Associated Persons, including the Customer
Directors) for Resolution 2 will not be valid and they will
be ineligible to vote on related motions).
A Proxy/Voting Form is enclosed with this Notice of
Meeting. If used to appoint a proxy, it must be deposited
with the Company, being not later than 48 hours before
the time for holding the meeting (i.e. on or before
11.00am on Wednesday 4th August 2021), using one of
the methods explained below:
• Depositing it at the Registered Office of the Company;
• Online at www.investorvote.co.nz
• Delivering it to the Company’s share registrar’s office at
Level 2, 159 Hurstmere Road, Takapuna, Auckland
• Posting it to the Company’s share registrar’s office in
the supplied reply paid envelope; or
• Faxing it to the Company’s share registrar at
+64 9 488 8787.
The Company may however accept late Proxy/Voting
Forms at its sole discretion.
(c) Postal Voting
Shareholders who are entitled to attend and vote at the
Meeting may cast a postal vote instead of attending in
person or appointing a proxy.
A Proxy/Voting Form is enclosed with this Notice of
Meeting. If used to cast a postal vote, it must be deposited
with the Company, being not later than 48 hours before the
time for holding the Meeting (i.e., on or before 11.00am on
Wednesday 4th August 2021), using one of the methods
explained below:
• Depositing it at the Registered Office of the Company;
• Online at www.investorvote.co.nz
• Delivering it to the Company’s share registrar’s office at
Level 2, 159 Hurstmere Road, Takapuna, Auckland
• Posting it to the Company’s share registrar’s office in
the supplied reply paid envelope; or
• Faxing it to the Company’s share registrar at
+64 9 488 8787.
The Company may however accept late Proxy/Voting
Forms at its sole discretion.
Procedural Notes

5

The New Zealand Refining Company Limited Notice of Special Meeting
Online appointment of proxies
and online voting
A shareholder entitled to attend and vote at the Meeting
may appoint a proxy online or may vote online on the
website of the Company’s share registry, Computershare:
www.investorvote.co.nz.
To appoint a proxy or vote online shareholders will be
required to enter their CSN/Securityholder Number,
postcode/country of residence and the secure access
Control Number that appears on the front of their Proxy/
Voting Form. Proxies and votes submitted in this way
must be received on or before 11.00am on Wednesday
4th August 2021. The Company may however accept late
online votes at its sole discretion.
The Company Secretary, Chris Bougen, has been
authorised by the Board to receive and count postal votes,
including online votes, at the Meeting.
Minority buy-out rights
Minority buy-out rights apply to Resolution 1 only.
If Resolution 1 is passed, a shareholder that cast all the
votes attached to Shares registered in the shareholder’s
name, and having the same beneficial owner, against
Resolution 1 may give written notice to the Company no
later than 5.00pm on Friday 20th August 2021 that they
wish to exercise their minority buy-out rights under the
Companies Act 1993. Notice may be given by email to
corporate@refiningnz.com, by post addressed to
Private Bag 9024, Whangarei 0148 or delivered by
hand at the Company’s office at Ralph Trimmer Drive,
Marsden Point 0171, New Zealand.
Virtual meeting
If shareholders do not wish to attend the Meeting in
person, or the physical meeting at Eden Park, Auckland,
cannot be held due to a COVID-19 lockdown, shareholders
can attend and participate in the Meeting online via an
internet connection (using a computer, laptop, tablet
or smartphone).
Details of how to participate virtually are provided in the
accompanying Virtual Meeting Guide, with instructions
for accessing the virtual meeting. Shareholders are
encouraged to review this guide and download the Lumi
app from the App Store of Google Play Store for free prior
to the Meeting.
Shareholders will be able to view the presentations,
vote on the Resolutions to be put to shareholders and
ask questions, by using their own computers or mobile
devices. Shareholders will still be able to appoint a proxy
to vote on their behalf or send a postal vote, as they
otherwise would, by following the instructions on the
Proxy/Voting Form and this Notice of Meeting. If a proxy is
appointed and attends the Meeting, shareholders will not
be able to vote as the proxy will do that for them.
NZ RegCo
Although NZ RegCo has reviewed and does not object
to this Notice of Meeting and the Booklet, NZ RegCo
takes no responsibility for any statement in this Notice of
Meeting or the Booklet.

The New Zealand Refining Company Limited Notice of Special Meeting

6
Venue location
The physical location for the Meeting is World Cup
Lounge East Room, Level 4, South Stand, Eden Park,
Reimers Avenue, Kingsland, Auckland. The venue is
accessible through entrance F, as shown on the
map below.
Eden Park is served by rail and bus services. Kingsland
train station is a short walk from Eden Park. There will
also be a limited number of car parks available at the
South Stand (through the car park entrance G, off Reimers
Avenue) on a first come, first serve basis.
Extra parking will be available behind the ASB Stand (via
car park entrance B or C, off Walters Road). Please allow
for a 5-10 minute walk from there to the South Stand.

REFINING NZ
Private Bag 9024
Whangarei 0148, NZ
T: + 64 9 432 8311
E: corporate@refiningnz.com
www.refiningnz.com

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Explanatory Booklet and Independent Appraisal Report
The Marsden Point
Conversion Proposal
VOTE IN FAVOUR

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
Purposes of this Booklet
The purpose of this Booklet is to:
• provide you with information about the Proposal;
• explain the terms, conditions and effect of the Proposal;
• explain the manner in which the Proposal will be implemented,
if approved; and
• provide you with information that could reasonably be
expected to be material to your decision whether or not to
vote on the Proposal.
This Booklet
• is not a Product Disclosure Statement.
• should be read in conjunction with Refining NZ’s financial
statements for the year ended 31 December 2020, available on
the Company’s website.
Your decision
This Booklet does not consider your individual investment
objectives, financial situation or needs. You must make your own
decisions and seek your own advice in this regard.
The information and recommendations contained in this Booklet
do not constitute, and should not be taken as constituting, financial
product advice.
If you are in any doubt as to what you should do, you should seek
advice from your financial, taxation, legal and/or other professional
adviser before making any decision regarding the Proposal.
A list of registered financial advisors is available at:
www.fsp-register.companiesoffice.govt.nz/.
Not an offer
This Booklet does not constitute an offer of securities to
shareholders (or any other person), or a solicitation of an offer of
securities from shareholders (or any other person), in any jurisdiction.
Laws of New Zealand
This Booklet has been prepared in accordance with New Zealand
law. Accordingly, the information in it may not be the same as
might have been disclosed had the Booklet been prepared in
accordance with the laws and regulations of another jurisdiction.
Forward-looking statements
This Booklet contains certain forward-looking statements which
are subject to risks (both known and unknown), uncertainties,
assumptions and other important factors that could cause the
actual conduct, results, performance or achievements of Refining
NZ (the Company) to be materially different.
Due to the unknown effects of legislative and social changes
relating to climate change reflected in the Climate Change
Response (Zero Carbon) Amendment Act 2019 and the subsequent
deliberations of the Climate Change Commission, it is particularly
difficult to accurately forecast future events.
Deviations as to future conduct, market conditions, results,
performance and achievements are both normal and to be expected.
Forward-looking statements generally may be identified by the
use of forward-looking words such as ‘aim’, ‘anticipate’, ‘believe’,
‘estimate’, ‘expect’, ‘forecast’, ‘foresee’, ‘future’, ‘intend’, ‘likely’,
‘may’, ‘planned’, ‘potential’, ‘should’, or other similar words.
Neither the Company nor any other person gives any
representation, assurance or guarantee that the occurrence of the
events expressed or implied in any forward-looking statements in
this Booklet will actually occur. You are cautioned against relying on
any such forward-looking statements.
Privacy and personal information
The Company and its service providers and advisers may collect
personal information in the process of implementing the Proposal.
Such information may include the name, contact details and
shareholdings of shareholders and the name of persons appointed
by those persons to act as a proxy or corporate representative at
the Meeting. The primary purpose of the collection of personal
information is to assist the Company to conduct the Meeting and
facilitate the exercise of shareholders’ rights.
Personal information of the type described above may be
disclosed to Computershare, print and mail service providers,
proxy solicitation firms, related companies of the Company and
the Company’s service providers and advisers. Shareholders
have certain rights to access personal information that has been
collected. Shareholders should contact Computershare in the
first instance, if they wish to access their personal information.
Shareholders who appoint a named person to act as their proxy or
corporate representative should make sure that person is aware of
these matters.
Responsibility for information
This Booklet has been prepared by, and is the responsibility of, the
Company, other than the Independent Appraisal Report set out in
Appendix A which has been prepared by, and is the responsibility
of, the Independent Appraiser. The Company and its Directors,
officers, employees and advisers have not been involved in the
preparation of the Independent Appraisal Report, other than to
provide information to, or answer questions from, the Independent
Appraiser. To the maximum extent permitted by law, the Company
and its Directors, officers, employees and advisers do not assume
any responsibility for the contents of any website referenced in
this Booklet.
NZ RegCo
Although NZ RegCo has reviewed and does not object to this
Booklet, NZ RegCo takes no responsibility for any statement in
this Booklet.
Timetable and dates
All references to times in this Booklet are references to
New Zealand time, unless otherwise stated. Any obligation
to do an act by a specified time in New Zealand time must
be done at the corresponding time in any other jurisdiction.
Further information available
Further information is available at www.refiningnz.com/.
Defined terms
Capitalised terms set out in this Booklet have the meanings given
to them in the Glossary in Section 8.
Date of this Booklet
This Booklet is dated 5 July 2021.

Refining NZ The Explanatory Booklet and Independent Appraisal Report

2
Support the Proposal
The Independent Directors unanimously agree that now is the right
time to make this change and convert the Marsden Point site into a
dedicated import terminal.
Grant Samuel, the Independent Appraiser, has opined that the new
Customer agreements are fair to all non-Customer Shareholders.

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Refining NZ The Explanatory Booklet and Independent Appraisal Report

Refining NZ The Explanatory Booklet and Independent Appraisal Report

4
Contents
Letter from the Chair 5
Actions for Refining NZ shareholders 7
Important dates 8
Summary of the Proposal 9
Introduction to Channel Infrastructure 11
Proposal questions & answers 19
1. Background to the Proposal 26
1.1 Structurally challenging conditions for
the refining industry 27
1.2 Overview of Strategic Review process 31
2. Channel Infrastructure
business description 32
2.1 Channel Infrastructure strategy 33
2.2 Import Terminal System (ITS) 34
2.3 Transport fuels demand outlook 37
2.4 ITS commercial agreements 41
2.5 Position for future opportunities 44
3. Implementation and timing for
Conversion to an import terminal 46
3.1 Timetable summary 47
3.2 Approval Requirements 48
3.3 Operational Requirements 50
3.4 Internal restructure 52
4. Import Terminal financial information 53
4.1 Overview 54
4.2 Revenue 55
4.3 Operating expenses 57
4.4 Capital expenditure and depreciation 58
4.5 Private storage fees and investment 58
4.6 Conversion and decommissioning one-offs 59
4.7 Impairment and revaluation implications 60
4.8 Tax losses 60
4.9 Balance sheet and capital structure 61
5. What if the Proposal is
not implemented? 64
5.1 Overview of Simplified Refinery 65
5.2 Refinery business model 65
5.3 New Zealand’s demand for transport fuels 66
5.4 Climate change and energy cost exposure 67
5.5 Simplified Refinery operations outlook 67
5.6 Risk of Customer claims 68
6. Risks to Refining NZ Group’s
business and plans 69
7. Statutory and other disclosures 80
7.1 Directors, Senior Managers and individual
relevant parties 81
7.2 Substantial shareholdings in Refining NZ
and relevant interests held by Directors
and Senior Managers 83
7.3 Other equity securities of Refining NZ 84
7.4 Interests of Directors and Senior Managers 85
7.5 Other material governance disclosures 87
7.6 Historical financial information 87
8. Glossary 90
APPENDIX A
Independent Appraisal Report 95

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
Letter from
the Chair
Dear Refining NZ shareholder,
On behalf of the Refining NZ Board, I am
pleased to present you with this Booklet
outlining the Proposal to convert Refining
NZ’s principal business from a toll oil refinery
into a dedicated fuel import terminal.
The conversion of Marsden Point oil refinery
to an Import Terminal is supported by the
Refining NZ Board, and your Independent
Directors have unanimously approved the
Proposal and recommend shareholders vote
in favour of the Proposal.
The new business would utilise Refining NZ’s highly
strategic infrastructure, including the Refinery to
Auckland Pipeline (RAP), to receive, store, test and
distribute transport fuels imported by Refining NZ’s
customers, safely, reliably and efficiently primarily
to the Northland and Auckland markets. Refining NZ
would be renamed Channel Infrastructure NZ Limited
(Channel Infrastructure) and its Import Terminal System
(ITS) would:
• Supply all of the jet fuel distributed to Auckland
International Airport (AIA)
In a “normal” (pre-COVID) year, around 75% of all
of international airline seat capacity to and from
New Zealand is via AIA which means that Channel
Infrastructure would be critically linked to New
Zealand’s largest expected export earner – tourism; and
• Provide New Zealand’s largest transport fuels
storage capacity
The shared ITS storage capacity of 180 million litres,
combined with additional private storage capacity at
Marsden Point, can continue to provide strategic fuel
stockholdings for the country.
With new long-term agreements with each of the
existing refinery Customers (bp, Mobil and Z Energy),
the Board expects Channel Infrastructure to:
• Generate significantly more stable earnings
compared with the inherent volatility of oil refining;
• Deliver superior “through the cycle” returns to
shareholders; and
• Be strongly positioned to participate in a
decarbonising of the New Zealand energy market,
including through opportunities to repurpose its
Marsden Point industrial site.
Under the Proposal, it is currently expected that:
• Your shareholding in Refining NZ (to be renamed
Channel Infrastructure) would not change
The one-off costs for the conversion to an ITS
(excluding private storage) are forecast to be debt
funded alongside the cashflow from new Customer
take-or-pay commitments.
• The Company recommences the payment of regular
dividends after an initial period of deleveraging
This is expected to be one to two years after terminal
operations begin, subject to the Company reaching
appropriate levels of leverage at that time.

Refining NZ The Explanatory Booklet and Independent Appraisal Report

6
Case for change
In April 2020 the Board initiated a Strategic Review to
determine the optimal operating model for the Refining
NZ business to maximise “through the cycle” returns to
shareholders and deliver a secure, competitive fuel supply
for New Zealand. The context included a significant fall in
gross refining margin (GRM) at the end of 2019 which was
further exacerbated by the impacts of COVID-19 from early
2020 and below cost of capital returns from the refinery
over the previous 10 years.
Phase 1 of the Strategic Review involved a comprehensive
assessment of alternative refinery and import terminal
models and engagement with key stakeholders including
Customers and Government. Factors considered by the
Board included:
• Forecasts prepared by independent expert market
commentators which indicated that it could be several
years before a rebalancing of regional transport fuels supply
and demand results in a meaningful recovery in GRM;
• Structural challenges to the competitiveness of the
refinery due to its relatively small scale and higher
cost of operating in New Zealand (including significant
increases in electricity and gas costs); and
• The strong preference of refinery Customers (who have
made Fee Floor subsidy payments amounting to circa
$115 million
1
in the sixteen months ended 30 April 2021)
to switch to an import terminal model.
The initial outcome of the Strategic Review, announced in
June 2020, was to develop plans to simplify the refinery
operations in the short-term to maintain cash neutral
operations at the Fee Floor, and in parallel explore with
Customers the commercial case for converting to an import
terminal. This Proposal reflects the outcome of this process.
Recommendation of the Independent Directors
Having regard to the risks, ongoing capital expenditure
profile, and expected returns from continued operation
as a Simplified Refinery versus the risks, Conversion
costs, and expected returns for an import terminal on the
proposed commercial terms, the Independent Directors
unanimously agree that now is the right time to make
this change and convert the Marsden Point site into a
dedicated import terminal.
Independent Appraisal Report
Grant Samuel has been appointed as the Independent
Appraiser to review the proposed arrangements with
the Customers for the provision of ITS services and
transitional arrangements as related party transactions.
Their report, which is included as Appendix A in this
Booklet, concludes that the arrangements are fair to
Non-Customer Shareholders.
Our approach to a “just transition”
We want to take this opportunity to acknowledge the
many people who will be affected by this change and in
particular the commitment of our highly capable workforce
to operating the refinery safely and to a high standard
over many years. The Refinery Transition Working Group
was established in 2020 and includes representatives
of Refining NZ, central Government, regional and local
councils, Northland Inc, Iwi and unions and has the
objective of ensuring a planned transition for future
changes at Marsden Point which mitigates the impact of
changes on refinery workers and the regional economy. A
key focus for our Board and management through transition
will be to support all of our employees and their families;
working closely with the Refinery Transition Working Group
and other stakeholders to ensure a planned transition to
help lessen the impacts of this change.
Shareholder vote
On behalf of the Board I encourage you to vote on the
Proposal by following the instructions set out in the
Notice of Meeting accompanying this Booklet. We thank
you for your support and look forward to your continued
involvement with Channel Infrastructure.
Yours sincerely,
Simon Allen
Chair
1
Unless explicitly stated, the currency referenced throughout this document is New Zealand dollars.

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
Actions for
Refining NZ
shareholders

Refining NZ The Explanatory Booklet and Independent Appraisal Report

8
Carefully read this Booklet
This is an important document regarding the future of
Refining NZ which requires your immediate attention.
You should read it in its entirety before deciding whether or
not to vote in favour of the Proposal. The Proposal involves
a major transaction, a change in the nature of Refining
NZ’s business and related party transactions to enter into
new agreements with Customers. The Proposal can only
proceed if shareholders approve both resolutions relating to
these matters.
There are answers to questions you may have about the
Proposal in the ‘Proposal Questions & Answers’ Section of
this Booklet.
If you are in doubt as to any aspect of the Proposal, you
should seek advice from your financial, taxation, legal
adviser and/or other professional advisers.
An Independent Appraisal Report on the fairness to Non-
Customer Shareholders of the terms and conditions that
Channel Infrastructure will enter with Customers under the
Proposal is set out in Appendix A of this Booklet and should
be considered as part of this Proposal.
Vote on the Proposal
Shareholders as at 11.00am on 6 August 2021 are entitled
to vote (subject to the voting restrictions applicable to the
Customers and their Associated Persons as set out in the
Notice of Meeting) at the Meeting to be held at Eden Park,
Reimers Avenue, Auckland on 6 August 2021 commencing
at 11.00am. You can also attend the Meeting virtually using
the instructions explained in the Notice of Meeting under
“Virtual Meeting”.
You can also vote by casting a postal vote or proxy either
by completing a Proxy Form online, by going to
www.investorvote.co.nz (you will need your CSN/
Securityholder Number, postcode/country of residence and
the secure access Control Number that appears on the
front of your Proxy Form), or by completing and returning
the Proxy Form included with the Notice of Meeting no
later than 11.00am on 4 August 2021.
Each Refining NZ Independent Director intends to vote
all Refining NZ Shares held or directly controlled by him
or her (as beneficial owner or as a discretionary proxy
holder) in favour of all resolutions before the Meeting.
If you have any questions in relation to this Booklet or
the Proposal, please call the Refining NZ Shareholder
Information Line on 0800 991 101 (within New Zealand) or
+64 9 488 8700 (outside New Zealand) on Business Days
between 9.00am and 7.30pm (NZ time), or consult your
financial, taxation, legal and/or other professional adviser.
Important dates
EventDate/time
Deadline by which Proxy Forms
must be received by the Share
Registrar or online votes cast
11.00am on
Wednesday
4 August 2021
Record time and date for determining
eligibility to vote at the Meeting
11.00am on Friday
6 August 2021
Meeting
11.00am on Friday
6 August 2021
Any material changes to these dates will be announced to the NZX Main Board (at www.nzx.com) and notified
on Refining NZ’s website at www.refiningnz.com/.

9

Refining NZ The Explanatory Booklet and Independent Appraisal Report
Summary of
the Proposal

Refining NZ The Explanatory Booklet and Independent Appraisal Report

10
The Proposal
This Proposal is to convert Refining NZ’s Marsden Point
site into a dedicated fuel import terminal and cease
operations as a toll refinery. The vision of the new
business is to be “New Zealand’s leading independent
fuel infrastructure company”, and The New Zealand
Refining Company Limited (Refining NZ) would be
renamed Channel Infrastructure NZ Limited (Channel
Infrastructure) under the new ticker code ‘CHI’.
Under the Proposal, Channel Infrastructure would utilise
its highly strategic infrastructure, including the Refinery
to Auckland Pipeline (RAP) to receive, store, test and
distribute transport fuels imported by Customers, safely,
reliably and efficiently primarily to the Northland and
Auckland markets. Over and above the shared Import
Terminal Services (ITS) storage capacity, additional private
storage capacity may be provided and new customers can
take up unutilised capacity in the RAP.
The Independent Directors believe that the proposed import
terminal model will deliver significantly more stable earnings
and superior “through the cycle” returns to shareholders,
when compared to the on-going capital investments required
and the range of likely returns from continuing to operate the
current simplified toll refining operation.
Conversion rationale
Relative to other refineries, the Marsden Point refinery
currently has a high cost of production and requires a
high Gross Refining Margin (GRM) to be economically
competitive with imported transport fuels.
This is due to the smaller scale and age of the refinery,
making it less efficient than the newer and much larger
scale exporting refineries and integrated refinery facilities
in the Asia-Pacific region, coupled with the high energy
costs in New Zealand, principally electricity and natural
gas. The high cost of coastal shipping required to transport
refined fuel from Marsden Point to New Zealand’s regional
terminals further erodes Refining NZ’s competitiveness
outside of the Northland and Auckland regions.
A structural change in refining markets arising from the
increased supply of refined product and a lower than
expected growth in demand for transport fuels in the
Asia-Pacific region has resulted in a reduced outlook for
refining margins. The global drop in demand triggered by
COVID-19 and the expectation of a slow recovery in oil and
refined products demand, particularly jet fuel, has further
exacerbated the oversupply in the global refining market.
This has resulted in very weak refining margins and significant
uncertainty regarding refining margins in the future.
Becoming an import terminal would remove Refining NZ’s
exposure to the competitive market pressures, and the
inherent volatility in refining margins. Channel Infrastructure
would earn more stable and higher through-the-cycle
returns for shareholders from its highly strategic
infrastructure assets.
Channel Infrastructure would also be strongly positioned to
participate in emerging opportunities to decarbonise the New
Zealand energy market including opportunities to re-purpose
its Marsden Point site, utilise existing infrastructure to supply
greener fuels, and leverage its skills to own and operate
other energy infrastructure assets in New Zealand.
Shareholder approvals
Shareholders are being asked to approve:
1. The Proposal as a major transaction and a change in the
nature of the business of Refining NZ; and
2. The entry into arrangements with the Customers for the
provision of ITS services, including Private Storage Services
and transitional arrangements as related party transactions.
The Proposal can only proceed if shareholders approve
both resolutions.
Conditions of Proposal
In addition to shareholder approval, the Proposal is subject to:
• Approval of the Proposal by Refining NZ’s lenders and
entering into final documentation and satisfying the
conditions precedent for conversion funding (see
Section 3.2);
• Entry into Terminal Services Agreements (TSA) and
Transition Agreements with all existing Customers and
these agreements becoming unconditional; and
• Final Investment Decision by the Refining NZ Board,
based on the Front End Engineering and Design (FEED)
assessment by management, which is expected to
occur by the end of Q3 of 2021.
It is expected that TSAs and Transition Agreements based on
these term sheets will be finalised and executed, preferably
with all Customers but at least a majority of Customers,
before a Final Investment Decision is taken by the Refining
NZ Board to approve and proceed with the Proposal. As
noted in Section 3.2, this is to assist Refining NZ in being
able to meet the targeted date for commencement of
import terminal operations by mid-2022. This would mean
that pending the last Customer executing a final TSA and
Transition Agreement, the existing Processing Agreement
will continue to apply, in the interim, in respect of that
Customer (including obligations on Refining NZ to make
available refinery capacity, and on the Customer to submit
feasible refinery programs, pay Processing Fees and the Fee
Floor (if applicable), and rights of the Customer to terminate
its Processing Agreement on notice) until agreement is
reached on the TSA and Transition Agreement.
If these conditions are ultimately not satisfied then Refining
NZ will not be able to proceed with the Conversion and
would remain a Simplified Refinery under the existing
Processing Agreements, although there is a dispute risk with
Customers as outlined in Section 5.6 and these agreements
may be terminated by Customers at any time on 12 months’
notice (see Section 5 for further details).
Effect on shareholding
The Company would change its name from Refining NZ to
Channel Infrastructure, but there would be no change to
your shareholding in the Company. You are not being asked
to contribute any additional capital at this time, and there is
no current proposal to raise additional capital.
Directors’ recommendation
The Independent Directors of Refining NZ unanimously
recommend that shareholders vote yes to all resolutions
put forward at the Meeting.
Independent Appraiser’s opinion
The Independent Appraiser has opined that:
1. The new Customer agreements are fair to all
Non-Customer Shareholders; and
2. This Booklet contains all the information a shareholder
should require to make an informed decision on
the Proposal.
Shareholders’ Meeting
The Meeting is to be held at 11.00am on Friday 6 August 2021.

11

Refining NZ The Explanatory Booklet and Independent Appraisal Report
Introduction
to Channel
Infrastructure

Refining NZ The Explanatory Booklet and Independent Appraisal Report

12
Channel Infrastructure will be
New Zealand’s leading independent
fuel infrastructure company, operating
a network of fuel importation, pipeline
and storage hub assets with an
aspiration for growth.
We’re passionate about keeping
Aotearoa’s economy moving today
and meeting the needs of tomorrow’s
fuel and energy markets.
We channel
New Zealand’s
energy

13

Refining NZ The Explanatory Booklet and Independent Appraisal Report
What is Channel Infrastructure and what would it do?
Channel Infrastructure’s primary business immediately
following the commencement of terminal operations
would be owning, operating and maintaining the Import
Terminal System (ITS). The ITS is the infrastructure
which would:
• Berth ships carrying refined transport fuels (e.g. jet
fuel, diesel and petrol) imported by Customers at two
deep-water jetties situated at Marsden Point.
• Store the fuel on behalf of Customers on a comingled
basis, in approximately 180 million litres of shared
product tanks , with capacity to provide additional
private storage capacity by refurbishing existing tanks.
• Provide fuel quality testing services as requested by
Customers as it is discharged from the ship and before
being distributed, using the onsite laboratory services
of Channel Infrastructure’s wholly-owned subsidiary,
Independent Petroleum Laboratory Limited.
• Distribute the fuel, destined primarily for the
Auckland and Northland markets via:
-a 170 kilometre multi-product pipeline that runs
from Marsden Point to the Wiri Terminal in South
Auckland (the Refinery to Auckland Pipeline RAP);
and
-a short pipeline to the truck loading facility
(TLF) adjacent to Channel Infrastructure’s site at
Marsden Point.
The Wiri Terminal is operated
2
by Wiri Oil Services
Ltd (WOSL), a joint venture of Refining NZ’s current
Customers; the TLF is owned by the Customers and is
situated on land owned by Refining NZ.
Channel Infrastructure’s new ticker code would be ‘CHI’.
Figure 1 set out below illustrates the key components of
the ITS.
* Note the TLF and Wiri Terminal end-delivery points do not form part
of the ITS assets owned by Refining NZ
2
Part of the Wiri Terminal infrastructure is owned by Refining NZ and located on land owned by bp, Mobil and Z Energy and leased by Refining NZ.
The infrastructure (including Refining NZ’s leasehold interest in the land) is sub-leased by Refining NZ to WOSL (a joint venture of bp, Mobil and Z
Energy) under non-cancellable operating leases which expire in February 2025 with no right of renewal. At the end of the lease term, ownership of
the infrastructure will revert to bp, Mobil and Z Energy.
2 jetties and 180
million litres of
fuels storage
Auckland supplied
via the RAP
170km RAP
Wiri Oil
Terminal
Distribution to
Northland via
Truck Loading
Facility
Figure 1
Not included in the
Import Terminal System

Refining NZ The Explanatory Booklet and Independent Appraisal Report

14
Outside of the ITS, Channel Infrastructure would:
• Have bilateral private storage arrangements with
customers, with potential for up to an estimated
100 million litres of additional tank capacity;
3

• Continue to own Independent Petroleum Laboratory
Limited (IPL);
4
and
• Consider opportunities to repurpose parts of the
Marsden Point site not required for the ITS and further
growth options beyond Marsden Point. Refer to
Section 2.5.
Summary of new ITS agreements
Channel Infrastructure would (either itself or through a
wholly-owned subsidiary
5
) own, operate and maintain the
ITS under new long-term terminal services agreements
(TSAs) with each of Refining NZ’s existing Customers, bp,
Mobil and Z Energy.
A description of the new arrangements with Customers
is set out in Section 2.4, and commentary on the financial
impact of the new arrangements is set out in Section 4.
We recommend that you read both sections in full,
together with the Independent Appraisal Report.
In summary, the new commercial arrangements for the
shared ITS facilities provide for:
• Long-term agreements: a 10-year initial term, with
each Customer having two rights of renewal for a
further five years each;
• Pricing: the aggregate fees payable by Customers
are expected to average approximately $95 million per
annum across the initial 10-year term (on a real basis)
6
.
This represents a combination of fixed annual fees
(which step down over the initial term) and variable
throughput fees (based on actual volumes delivered),
subject to minimum take-or-pay commitments (which
also step down over the initial 10-year term);
• Private storage: additional value accretive, Private
Storage Services arrangements to be agreed
with Customers;
• Third party access: Channel Infrastructure may offer
third parties access to any unutilised RAP capacity after
the first 3 years of the initial term. On current forecasts,
there is enough capacity in the RAP to supply Auckland’s
expected future transport fuel demand (refer to Section
2.3); and
• Freedom of operation: Channel Infrastructure is entitled
to conduct any other business it wishes to, provided that
in so doing it continues to meet its obligations under
the TSAs.
3
Refer to Section 4.5 for additional detail.
4
IPL is a 100% owned subsidiary of Refining NZ providing specialist laboratory testing services in the Fuels, Biofuels, Industrial and Environmental areas
to a wide range of customers throughout New Zealand and the South West Pacific. It has laboratories at Marsden Point and in Taranaki and is ISO 17025
accredited. IPL plays a key role in the testing of transport fuels released into the NZ market, including the Government’s fuels monitoring programme, to
ensure quality specifications are met.
5
If the Company proceeds with the Restructure, some or all of the ITS assets will be owned and operated by a wholly-owned subsidiary of the Company.
See Section 3.4.
6
At assumed levels of product throughput reflecting current demand forecasts. See Section 2.3.

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
Comparison of Channel Infrastructure to Refining NZ today
As Channel Infrastructure, Refining NZ shareholders would be exposed to a fundamentally different investment proposition
when compared to the current business model of toll refining and pipeline operations. The key differences between the two
business models are summarised in Table 1 set out below:
CHARACTERISTICCHANNEL INFRASTRUCTUREREFINING NZ
Earnings
volatility
Relatively stable expected earnings.
Combination of fixed and variable fees (with
minimum take or pay commitments), without
linkages to regional refining margins, expected
to average approximately $95 million per annum
across the initial 10-year term (on a real basis)
7
.
All fees denominated in New Zealand dollars.
Operating expenses largely fixed, and expected to
be in the order of $35 million per annum.
Variability in revenue / earnings primarily a function
of changes in fuel volume demand with downside
risk limited by annual take or pay commitments.
High earnings volatility.
Direct exposure to Gross Refining Margins (GRM),
which is largely driven by the Asia-Pacific region’s
transport fuels supply and demand, and a material
exposure to foreign exchange movements. This
results in highly volatile earnings, with annual average
GRM’s ranging between US$1.63 per barrel to
US$11.30 per barrel over the last 15 years.
Refer to Section 6 under “Refining Margin and
Exchange Rate” risk for further details.
Sustainable
earnings
Limited upside from Core
ITS Services.
Core earnings growth would largely depend on
increased fuel demand (volume delivered), which
is expected to be limited (refer to Section 2.3)
beyond any value adding ITS services, including
private storage.
Customers will be incentivised to maximise
utilisation of the ITS through the fixed and variable
fee structure.
Beyond Core ITS Services and private storage,
there is the potential to re-purpose parts of the
Marsden Port site as an energy hub and consider
acquisitions of other energy infrastructure (refer to
Section 2.5).
Scope for a recovery in earnings.
GRM is inherently volatile. Earnings from refining
operations could improve if margins were to recover
significantly and/or the US$ was to strengthen.
Earnings are also dependent on the level of refinery
utilisation by Customers, with Customers having the
ability to import refined fuels through other terminals.
A GRM recovery will be dependent on improved
market fundamentals – a significant reduction in
global refining capacity and/or a significant demand
recovery.
The current Processing Agreements cap earnings
upside at a GRM of US$9 per barrel.
Limited downside from Core
ITS Services.
Combination of fixed and variable fees (with
minimum take or pay commitments).
Variability in revenue / earnings primarily a function
of changes in fuel demand, or in the future, any
value-added services.
Significantly reduced exposure to electricity costs
and no requirement for gas supply.
Relatively broad-based index for fee escalation
provides inflation protection.
Risk that Conversion costs exceed forecasts (refer
to Section 6 under “Conversion Expense and
Schedule” risk for further details), to be managed
through effective project execution and clear risk
mitigation plans.
Scope for further cost increases.
Current processing Fee Floor protects against very
low GRM, but Refining NZ is only cash neutral at the
Fee Floor when operating as a Simplified Refinery
with lower volumes (at its current cost base).
Materially higher exposure to energy (electricity and
natural gas) costs, employee cost inflation and carbon
costs than an ITS.
Refer to Section 6 under “Customer Disputes and
Simplified Refinery Model” risk for further details.
7
At assumed levels of product throughput reflecting current demand forecasts. See Section 2.3.

Refining NZ The Explanatory Booklet and Independent Appraisal Report

16
CHARACTERISTICCHANNEL INFRASTRUCTUREREFINING NZ
Operational risk
Lower operational risk.
Relatively less complex and less hazardous
activity given no refining operations.
Operational risks of finished fuel storage and
transfer are well understood and there is an ability
to mitigate risk with effective operational and
safety performance standards.
Higher operational risk.
More fully described in Section 6 under the
“High Hazard Industry” risk.
Operational risks of refining are well understood,
with effective operational and safety performance
standards in place.
The operational refining risk is comparatively higher
due to the more complex processes and equipment
which requires significant ongoing investment (capital
and technical skills) to effectively manage those risks.
Capital intensity
Moderate capital intensity.
Initial investment of circa $200 million to $220
million over 5 to 6 years following Final Investment
Decision (FID) to fully implement ITS conversion,
an additional up to circa $60 million to prepare
tanks for Private Storage Services
8
, and circa $50
million to $60 million
9
for the demolition of the
decommissioned refinery assets, with the timing
yet to be determined.
Ongoing capital investment of circa $5 million to
$10 million per annum.
High capital intensity.
Estimated sustaining capital investment as a
Simplified Refinery of circa $50 million to $60 million
per annum until the refinery is forced to convert to
an import terminal in the future. This cost reflects
the large asset base (processing equipment and
associated tanks and linework).
Significant investment in maintenance turnarounds
and catalysts to maintain safe and reliable refining
operations. For example, an estimated $25 million
maintenance turnaround is required mid-2022 if the
import terminal conversion does not occur by
that time.
Carbon exposure
Lower carbon exposure.
Significant alignment with the Climate Change
Response Act 2002, with a circa 98% reduction in
Scope 1 and 2 CO2 emissions
10
of over 1 million
tonnes per annum.
A circa 85% reduction in electricity consumption
and no natural gas requirements.
Opportunities to participate in decarbonisation
of transport fuels and energy through existing
infrastructure and repurposing of the Marsden
Point site as outlined in Section 2.5.
Higher carbon exposure.
Growing exposure to New Zealand Emissions Trading
Scheme (ETS) more fully described in Section 6 under
“Climate Change” risk, with significant uncertainty
longer term.
Significant exposure to electricity and gas costs and
security of supply.
Access to capital may be constrained in the future
due to Environmental, Social and Governance (ESG)
considerations.
8
This would have an associated opportunity for incremental revenue of up to $10 million per annum (in real terms).
9
On a real basis.
10
Compared to current CO2 emissions.

17

Refining NZ The Explanatory Booklet and Independent Appraisal Report
Channel Infrastructure
investment features
Channel Infrastructure (either itself or through a wholly-
owned subsidiary – see Section 3.4) would own and
operate highly strategic critical infrastructure, including the
RAP, distributing transport fuels (e.g. jet fuel, diesel and
petrol) primarily to the Northland and Auckland markets,
including all of the jet fuel to Auckland International Airport
(AIA).
In a “normal” (pre-COVID) year, around 75% of all of
international airline seat capacity to and from New Zealand
is via AIA which means that Channel Infrastructure would
be critically linked to New Zealand’s largest expected export
earner - tourism.
The ITS is expected to handle between 3 and 3.5 billion
litres of transport fuels annually, primarily servicing the
Northland and Auckland markets, which make up 40% of
New Zealand fuel demand.
Channel Infrastructure would have long-term, committed
relationships with its Customers underpinning stable
earnings, and an intended dividend payout of 60-70% of Free
Cash Flow following an initial period of deleveraging, subject
to which dividend payments are expected to recommence
within 1 to 2 years from commencement of terminal
operations. Please refer to the assumptions underpinning
the financial forecasts as outlined in Sections 2 and 4 of this
Booklet. By comparison, the Independent Appraisal Report
notes in Section 6.7 that Refining NZ may not be in a position
to pay dividends until FY2026 or FY2027 if it continues to
operate as a Simplified Refinery.
Compared to direct CO2 emissions in 2019, prior to refinery simplification.
Ownership of critical
and highly efficient
infrastructure
• Safe, reliable, efficient and established supply chain for primarily the Auckland and
Northland markets, which make up around 40% of the New Zealand transport
fuels market
• The RAP is a multi-product pipeline that provides the most cost effective and
least carbon intensive solution to deliver fuel to Auckland, New Zealand’s largest
market and eliminates an estimated 120,000 trucking movements each year
• Fee structure incentivises utilisation of the infrastructure and underpins relative
revenue stability
• Strong conversion of EBITDA into free cash flow with material tax losses expected
from conversion to offset future tax liabilities (subject to loss carry forward rules
(Income Tax legislation))
• The Company expects to distribute at least 60-70% of Free Cash Flow to shareholders
as dividends within one to two years of commencement of import terminal operations
Projected stable
earnings, cash flow
and dividends
• Opportunities to repurpose existing assets (outside of ITS) at Marsden Point,
including strategic fuels storage and a range of emerging options aligned with a
decarbonising New Zealand energy mix
• Uniquely positioned to consolidate strategic parts of the national transport fuels
supply chain, should those opportunities become available
Focused growth
strategy
• Conversion would reduce New Zealand’s direct emissions by almost
one million tonnes of CO
2
per annum (or circa 5% of New Zealand’s total
emissions reduction required by 2030)
• Opportunities to participate in decarbonisation of transport fuels and energy
through existing infrastructure and repurposing of the Marsden Point site
Supporting
decarbonisation
of New Zealand
economy
• 10 year initial term, with two five year options for Customers to extend
• Initial take-or-pay commitments will enable one off Conversion and
decommissioning costs, identified in Section 4.6, to be debt funded
• Additional value accretive, private storage arrangements
• Provision for third party access to unutilised RAP capacity after three years
from commencement
Long term Customer
contracts
The key investment features of Channel Infrastructure as a dedicated import terminal under the
negotiated Customer arrangements are as follows:

Refining NZ The Explanatory Booklet and Independent Appraisal Report

18
Channel Infrastructure
financial summary
Channel Infrastructure is expected to generate relatively
stable earnings and cash flows. Further financial information
about Channel Infrastructure is set out in Section 4.
Key financial highlights include:
• Fees for Core ITS Services comprising an annual Fixed
Fee largely paid by Customers based on their relative ITS
utilisation, and variable Throughput Fee based on each
Customer’s actual product volumes. Aggregate fees are
estimated to average circa $95 million per annum
11
(on
a real basis excluding annual indexation adjustments)
during the 10-year initial term, including a minimum
combined Customer take-or-pay commitment of $100
million per annum for the first 3 years of operation as an
import terminal;
• Annual operating expenses (including IPL) are estimated
to be approximately $35 million once ITS services
commence and excluding one-off Conversion expenses;
• Estimated ongoing capital expenditure of approximately
$5 million to $10 million per annum;
• Initial one-off costs of approximately $200 million to
$220 million to implement the ITS conversion and in
the approximately 5-6 years following Final Investment
Decision (FID);
• Demolition costs of circa $50 million to $60 million (in real
terms) are expected to be incurred, with timing yet to be
determined (having regard to repurposing of Marsden
Point and not expected to be required within ten years of
commencement of ITS services); and
• Estimated tax losses of approximately $300 million to
$350 million generated on the decommissioning and
write-off of refinery assets (subject to IRD assessment
and the Income Tax Act 2007 loss carry forward rules as
outlined in Section 4).
In addition to the shared ITS capacity, Customers are
seeking Private Storage Services arrangements with
Refining NZ. Customer negotiations are ongoing and
current estimates are that private storage requirements
may involve up to 100 million litres of additional storage
capacity. Detailed planning work for this additional capacity
is underway, with current conversion cost estimates for
100 million litres of additional storage capacity of circa
$60 million and opportunity for incremental revenue of up
to $10 million per annum (in real terms).
Refining NZ has received credit approval for debt facilities,
subject to conclusion of satisfactory documentation and
satisfaction of conditions precedent, to fund the one-off costs
of the Conversion and decommissioning identified in Section
4.6 which, together with its existing facilities and subordinated
notes, is expected to provide sufficient liquidity through the
conversion. Total debt facilities will amount to around $400
million (refer to Section 4.9 for further details).
Timing of recommencement of dividends is subject to
achieving the required deleveraging (below 4.5x Net Debt/
EBITDA), when the Board expects to resume dividend
payments with a policy based on paying at least 60-70%
of Free Cash Flow. This is expected to be within 1 to 2
years post commencement of import terminal operations
although the Board reserves its right to adjust the payout
ratio or expected timing for the recommencement of
dividends should the timing, costs or revenue associated
with the Conversion (including new services such as
Private Storage Services) or the import terminal business
change. The dividend policy will be subject to the Board’s
due consideration of the Company’s medium-term asset
investment programme; a sustainable financial structure for
Channel Infrastructure, recognising a targeted investment
grade rating (within five years of the Services Effective
Date); and the risks from short and medium term economic
and market conditions and estimated financial performance.
Conversion implementation
and timing
The Proposal is conditional on a number of matters:
• Shareholder approval (the subject of this Booklet);
• Lender approvals and final agreements and satisfaction
of conditions precedent for conversion funding (refer to
Section 3.2);
• Final Investment Decision by the Refining NZ Board to
approve and proceed with the Proposal, based on Front
End Engineering and Design assessment by management,
which is expected to occur by the end of Q3 of 2021; and
• Entry into a TSA and Transition Agreement with each
Customer and these agreements becoming unconditional.
Section 2.4 sets out the conditions to the TSAs that are
under negotiation with Customers.
Following FID and entry into the final TSAs and Transition
Agreements,the process to transition from a refinery to
a dedicated import terminal operation is expected to
take between 6 to 9 months from FID, with major
activities including:
• The completion of capital projects required to safely and
efficiently operate as a terminal;
• Organisational and system process changes;
• Transitioning the workforce; and
• Safe refinery shutdown and closure.
Based on information available to it as at the date of this
Booklet, and subject to a FID being made by the end of
Q3 2021, the Board would expect Core ITS Services to
commence by mid-2022.
For more information on the implementation plan and
expected timing of the Proposal, refer to Section 3.
11
At assumed levels of product throughput reflecting current demand forecasts. See Section 2.3.

19

Refining NZ The Explanatory Booklet and Independent Appraisal Report
Proposal
questions &
answers

Refining NZ The Explanatory Booklet and Independent Appraisal Report

20
Proposal questions & answers
The following section provides summarised answers to some of the key questions that
Refining NZ shareholders may have in relation to the Proposal. More detailed information
on each answer is outlined in the corresponding section specified in the table below.
QUESTION ANSWERSECTION
Proposal
What is
the Proposal?
The Proposal is to convert the Company’s operations to an import terminal
(with the Company’s name to be changed from Refining NZ to Channel
Infrastructure), instead of operating as a tolling oil refinery and distributing
transport fuels under the existing Processing Agreements.
Channel Infrastructure’s operations would include receiving transport fuels
(petrol, diesel and jet fuel) imported into Marsden Point, storing and then
distributing these products through the Refinery to Auckland Pipeline
(RAP) into Wiri or to the truck loading facility (TLF) at Marsden Point.
Channel Infrastructure would operate under Terminal Services Agreements
(TSA) with Refining NZ’s existing Customers and potential new customers.
For the Proposal to be implemented, the majority of the votes of Non-
Customer Shareholders of Refining NZ voting need to be cast in favour
of the proposed Import Terminal System (ITS) commercial terms with
Customers, and a majority of 75% of the votes of all shareholders voting,
need to be cast in favour of the Proposal.
Following approval of the Proposal by shareholders and subject to Final
Investment Decision (FID) by the Refining NZ Board by the end of Q3
2021, Refining NZ expects to begin operating as an import terminal by
mid-2022.
“ Summary of
the Proposal”
What are the key
advantages of
the Proposal?
The key expected advantages of the Proposal compared to Refining NZ’s
existing operations include:
• Lower earnings volatility and high visibility of future cashflows;
• Lower operational risk;
• Timing of earnings recovery and recommencement of dividends not
being a function of gross refining margin GRM;
• Post initial Conversion capex, being less capital intensive on an
ongoing basis;
• Less carbon and energy intensive; and
• Release of existing Customer dispute claims.
“ Comparison
of Channel
Infrastructure
to Refining
NZ today”
What are the key
disadvantages
associated with
the Proposal?
The key disadvantages of the Proposal compared to Refining NZ’s
existing operations include:
• Less medium-term earnings upside without exposure to GRM and
foreign exchange rate movements;
• Significant upfront Conversion costs which include risks associated
with the timing and quantum of these costs;
• Requirement to develop a new set of organisational and personnel
technical capabilities to operate a terminal; and
• Fewer employees in a terminal operation than a refinery.
See also Section 6 for the risks associated with Channel Infrastructure and
the Transition (refer to Transition Risks).
“ Comparison
of Channel
Infrastructure
to Refining NZ
today” and
Section 6

21

Refining NZ The Explanatory Booklet and Independent Appraisal Report
QUESTION ANSWERSECTION
What are
the key
conditions for
implementing
the Proposal?
The key conditions required to implement the Proposal include:
• Approval by majority of the votes of Non-Customer Shareholders voting
in respect of the proposed ITS commercial terms and a majority of 75%
of the votes of all shareholders voting in respect of the Proposal overall;
• Lender approval and final documentation and satisfaction of conditions
precedent for conversion funding;
• TSAs and Transition Agreements being entered into with all Customers
and these agreements becoming unconditional; and
• FID by the Board to approve and proceed with the Proposal, based on
Front End Engineering Design assessment by management.
See also Section 2.4 for a summary of the material conditions to the TSAs
becoming unconditional.
Section 3.2
(pages 48-49)
What happens if
the Proposal is not
implemented?
If the Proposal is not implemented, Refining NZ will continue to operate a
Simplified Refinery under the existing Processing Agreements, although
there is a dispute risk with Customers as outlined in Section 5.6 and
these agreements may be terminated by Customers at any time on
12 months’ notice.
It is expected the refinery would be forced to convert to an import terminal
at some point in the future, as reduced petrol demand would be expected
to make refinery operations infeasible, although this would be subject to
commercial terms negotiated at that time with Customers and there is no
guarantee these terms would be the same as the Proposal or that Refining
NZ will have sufficient capital at that time to fund the conversion.
Ongoing refinery capital expenditure is estimated at $50 million to
$60 million per annum.
Section 5
(pages 64-68)
What are the
agreements
Refining NZ will
have with its
Customers as
a terminal?
Refining NZ would be renamed Channel Infrastructure and either itself or
a wholly-owned subsidiary (see Section 3.4) would provide ITS services
under a Terminal Services Agreement (TSA) with each of its Customers.
Key terms of the TSAs include:
• 10-year fixed contract term with two five-year renewal options at each
Customer’s election;
• Monthly fee payments comprising fixed and variable components;
• Minimum annual take or pay fee commitment;
• All fees subject to annual indexation in accordance with PPI
movements; and
• Third party access to unutilised RAP capacity after the first 3 years of
the TSAs term.
Refer to Section 2.4 for a summary of the TSA.
Section 2.4
(pages 41-43)
Has Refining NZ
committed to the
agreements with all
three Customers?
Refining NZ is negotiating binding TSAs and Transition Agreements with
bp and Z Energy after reaching non-binding in principle agreement on key
commercial terms with them earlier this year. At the date of this Booklet,
negotiations continue with Mobil based on the term sheets that have
been agreed with the other Customers. While negotiations continue in
good faith, it is not known at this time when or if these agreements will
be concluded.
Section 2.4
(pages 41-43)

Refining NZ The Explanatory Booklet and Independent Appraisal Report

22
QUESTION ANSWERSECTION
What are the costs
of the Proposal?
Implementation of the Proposal is estimated to cost approximately
$200 million to $220 million in upfront conversion and decommissioning
costs over five to six years from FID. Refer to Section 4.6 for further
details of these costs.
Up to $60 million in additional capital investment may be required to
convert tanks for Private Storage Services.
Refining NZ also expects an additional $50 million to $60 million (in real
terms) for the future demolition of decommissioned refining assets, with
the timing to be determined having regard to repurposing of the Marsden
Point site and is currently not expected to be required within circa 10 years
of the Services Effective Date.
Sections 4.5 and 4.6
(pages 58-59)
Does Refining NZ
have the capabilities
to implement the
Proposal to budget
and schedule?
Refining NZ has a strong track record of delivering complex capital
projects and has complemented its management and project teams’
skills with personnel who have delivered similar conversion and major
capital projects outside of New Zealand.
N/A
How will the
Proposal be funded?
One-off ITS conversion and decommissioning costs (identified in Section 4.6)
are expected to be debt-funded, supported by take-or-pay commitments.
Additional funding requirements for Private Storage Services is still to be
determined with funding plans to be confirmed at the time of FID.
Sections 3.2 and 4.6
(pages 48-49 and
page 59)
Are Refining NZ’s
Customers selling
their shares?
The Proposal does not involve any change in shareholding of the
Customers. However, as shareholders, the Customers have the right
to sell their shares at any time without consulting Refining NZ.
N/A
How do the
Refining NZ
Independent Directors
recommend I vote?
Each Refining NZ Independent Director recommends that you vote
in favour of the Resolutions before the Meeting.
Each Refining NZ Independent Director intends to vote all Refining NZ
Shares held or directly controlled by him or her in favour of the
Resolutions before the Meeting.
Section 3.2
(pages 48-49)
What is the
Independent
Appraiser’s opinion
on the Proposal?
The Independent Appraiser has concluded that:
1. The new Customer agreements are fair to all Non-Customer
Shareholders, and
2. This document contains all the information a shareholder should
require to make an informed decision on the Proposal.
Appendix A
(page 95)
What is the impact
of the Proposal on
my Refining NZ
shareholding?
The Company would change its name from Refining NZ to Channel
Infrastructure, but there would be no change to your shareholding in the
Company. You are not being asked to contribute any additional capital at
this time, and there is no current proposal to raise additional capital.
N/A
What options
are available to
shareholders if they
do not support the
Proposal?
A Refining NZ shareholder who does not support the Proposal may:
• Sell their Refining NZ Shares at any time;
• Vote against the Proposal at the Meeting if they hold a Refining NZ
Share at 11.00am on 6 August 2021.
If both resolutions are passed by shareholders and the other conditions
are satisfied, (refer to Section 3.2), the Proposal will be implemented.
Shareholders who vote against the special resolution of shareholders may
exercise a minority buyout right in accordance with the provisions of the
Companies Act 1993. This is more fully explained in the Notice of Meeting
accompanying this Booklet.
N/A

23

Refining NZ The Explanatory Booklet and Independent Appraisal Report
QUESTION ANSWERSECTION
Refining NZ after implementation of the Proposal
(to be renamed Channel Infrastructure)
What will
Channel
Infrastructure’s
strategic
priorities be?
Channel Infrastructure’s purpose will be to provide reliable, efficient fuel
infrastructure solutions to keep New Zealand moving now and into a lower
carbon future and deliver sustainable returns for shareholders. Strategic
priorities to support a vision to be “New Zealand’s leading independent
fuel infrastructure company”, include:
• Safe, reliable and low-cost operations;
• Supporting the transition to lower carbon fuels; and
• Growing and diversifying its asset base.
Section 2.1
(page 33)
What will
Channel
Infrastructure’s
dividend policy be?
Refining NZ estimates that it will be in a position to recommence dividends
one to two years following commencement of the terminal operations.
Channel Infrastructure’s dividend policy is expected to be based on
a payout ratio of 60-70% of Free Cash Flow after an initial period of
deleveraging to reduce leverage to below 4.5 times Net Debt/EBITDA and
to achieve target leverage of 3-4 times Net Debt/EBITDA within five years
of commencement of ITS services.
The Board reserves its right to adjust the payout ratio or expected timing
for the recommencement of dividends should the timing, costs or revenue
associated with the Conversion (including new services such as Private
Storage Services) or the import terminal business change. The dividend
policy will be subject to the Board’s due consideration of the Company’s
medium-term asset investment programme; a sustainable financial
structure for Channel Infrastructure, recognising the targeted investment
grade rating (within five years of the Services Effective Date); and the
risks from short and medium term economic and market conditions and
estimated financial performance.
Section 4.9
(pages 61-62)
What will Channel
Infrastructure’s debt
capital structure be?
Channel Infrastructure will target a Net Debt/EBITDA metric of between
three and four times, aligned with an investment grade shadow credit
rating, within a five year period post commencement of ITS services.
Section 4.9
(pages 61-62)

Refining NZ The Explanatory Booklet and Independent Appraisal Report

24
QUESTION ANSWERSECTION
Voting on the Proposal
What are the voting
thresholds?
In order for the Proposal to proceed, the two Resolutions relating to it
must both be passed:
• Resolution 1 (Major transaction and change in nature of business
approval) will be passed if a majority of 75% of all votes cast by
shareholders are in favour.
• Resolution 2 (Related party transaction approval) will be passed
by a simple majority of the votes cast by shareholders voting in favour,
other than the Customers and their Associated Persons (who are not
permitted to vote in favour of Resolution 2).
Section 3.2 and the
Notice of Meeting
(pages 48-49)
Who is entitled to vote
at the Meeting?
Persons with Shares at 11.00am on 6 August 2021 are entitled to vote on all
Resolutions before the Meeting, except the Customers and their Associated
Persons who are not permitted to vote in favour of Resolution 2.
Notice of Meeting
When is the Meeting?
The Meeting is on 6 August 2021 at Eden Park, Auckland, starting at
11.00am. The Meeting will be a hybrid meeting, with shareholders also
able to attend and vote online.
Notice of Meeting
What is the
procedure to
vote in person?
If you are entitled to vote and wish to do so in person, you should attend
the Meeting and bring your Proxy Form (which contains your attendance
slip and ballot paper) with you to the Meeting.
A corporation may appoint a person to attend the Meeting as its
representative in the same manner as that in which it could appoint
a proxy.
You can also attend the Meeting and vote virtually by following the steps
set out in the Notice of Meeting and accompanying “Virtual
Meeting Guide”.
Notice of Meeting
and Proxy Form
What is the
procedure to vote
by proxy or online?
Accompanying this Notice of Meeting is a personalised Proxy Form.
In order to vote by proxy, fill out the Proxy Form and send it to the Share
Registrar in accordance with the instructions on the form so that it is
received by 11.00am on 4 August 2021.
A shareholder may appoint “The Chairman of the Meeting” as proxy.
The Chairman intends to vote any undirected proxies held by him in favour
of all Resolutions before the Meeting. Note that the Customers (and their
Associated Persons, including the Customer Directors) are disqualified
from voting on Resolution 2 under the NZX Listing Rules. Therefore,
any such persons may only act as proxies in respect of Resolution 2
in accordance with express instructions of the shareholder appointing
them as a proxy (i.e. discretionary proxies given to a Customer (or their
Associated Persons, including the Customer Directors) for Resolution 2
will not be valid).
If you have lost your Proxy Form, please contact the Share Registrar at
+64 9 488 8777.
If you wish to vote or submit your proxy online, you’ll need to login to
www.investorvote.co.nz by entering your CSN/Securityholder Number,
postcode/country of residence and the secure access Control Number
that appears on the front of your Proxy Form. Then follow the online
prompts to cast your vote or submit your proxy no later than 11.00am
on 4 August 2021.
Notice of Meeting
and Proxy Form
What if I do not vote at
the Meeting or if I vote
against the Proposal?
If Resolutions 1 and 2 are approved by the requisite majority of
shareholders and the conditions to implementation of the Proposal set
out in Section 3.2 are satisfied then the Proposal will be implemented.
However, those shareholders voting against Resolution 1 will be entitled to
exercise a minority buy-out right as explained in the Notice of Meeting.
Section 3.2 and
Notice of Meeting
(pages 48-49)

25

Refining NZ The Explanatory Booklet and Independent Appraisal Report
QUESTION ANSWERSECTION
Taxation
What are the tax
implications of the
Proposal for the
Company?
Converting to an import terminal will result in a write-down of Refining
NZ’s refinery-related assets, and this is expected to generate a tax loss
of approximately $300-$350 million. This tax loss, together with existing
tax losses, may be used to offset future income tax obligations subject
to the loss carry-forward provisions in the Income Tax Act 2007. At this
stage, Refining NZ does not know how long it will take to utilise its current
and expected tax losses as this will be a function of the size of the tax
loss arising on the write-down of its asset base, the performance of
Channel Infrastructure in future years, and whether the loss carry forward
provisions continue to be met (refer to Section 4.8).
It is expected that the tax losses would be used to offset Refining NZ’s
future taxable income, increasing Channel Infrastructure’s free cash flow,
which could be paid as a dividend to shareholders, pay down debt or used
to fund future energy and infrastructure growth opportunities.
Section 4.8
Other information
If you have further
questions
If you have further questions, it is recommended that you consult an
appropriately authorised financial adviser, solicitor, accountant and/
or other professional adviser before voting on the Proposal, or email
refiningnzvote@computershare.co.nz
N/A

Refining NZ The Explanatory Booklet and Independent Appraisal Report

26
1. Background
to the Proposal
VOTE IN FAVOUR

27

Refining NZ The Explanatory Booklet and Independent Appraisal Report
1.1 Structurally challenging conditions for the
refining industry
Refining NZ has played a significant role in
New Zealand’s fuel supply chain since the
refinery was originally commissioned in
1964. It is one of the safest and most reliable
oil refineries in the Asia-Pacific region and
continued investment has helped to ensure
that the refinery has kept pace with emerging
industry standards, with a particular focus on
product quality, operating efficiency and carbon
emission reduction.
Notwithstanding this, over recent years there has been
a structural change in the external environment in which
Refining NZ operates; a weakening gross refining margin
(GRM) due to a structural refined fuels global over supply
and cost increases has made it increasingly challenging
to deliver an economic return to shareholders. Although
these structural changes in the business environment had
started prior to COVID-19, the pandemic has amplified
these challenges with fuel demand falling sharply and the
timing of margin recovery uncertain.
Historically, as the GRM has weakened so has Refining
NZ’s share price; this is reflected in the following chart
which shows that there is a high degree of correlation.
12
10
8
6
4
2
0
-2
-4
-6
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
$ per barrel
GRM USD/bblShare price NZD
Share price vs GRM
$ per share
Refining NZ share price versus GRM
Figure 2: Over the last 15 years, the annual average GRM has ranged from a high of US$11.30 per barrel in 2008, to a low
of US$1.63 per barrel in 2020, and over that same timeframe the Company’s share price has fallen from around $4 per
share to less than $1 per share ($0.67 per share as at 28 June 2021).
The current challenges impacting the refining sector are described in more detail below.

Refining NZ The Explanatory Booklet and Independent Appraisal Report

28
Weak near-term outlook for
Gross Refining Margin
Prior to the COVID-19 pandemic, the global refining
industry was undergoing significant structural change.
A large number of ‘mega-refineries’ in the Asia-Pacific
region had been commissioned, with the new supply of
refined product significantly outstripping growth in demand
for transport fuels. The surplus of refined product put
significant downward pressure on regional gross refining
margins, a key driver of Refining NZ’s revenue.
Notwithstanding the announced closure of several
refineries in Australia and Asia which have also been
impacted by similar industry headwinds, further confirmed
capacity additions in Asia through to 2024 are expected to
continue to weigh heavily on gross refining margins for the
next few years.
With regional Asian and Indian refineries able to meet
New Zealand fuel specifications, and utilise spare
capacity and relatively cost effective shipping options, it is
structurally difficult for small stand-alone refineries like the
Marsden Point oil refinery to compete, particularly if not
supported by Government or state owned enterprise, or if
not integrated in a downstream processing value chain.
To date, refinery closures representing around 2.5 million
barrels per day before the end of 2022 have been
announced. Expert market commentators are expecting
further closures to be announced amounting to an
additional 1 million barrels per day of refining capacity
closed before the end of 2022. However, additional capacity
is expected to come online through to 2024, which is
forecast to more than offset confirmed and forecast
refinery closures. The market commentators forecast
that, by the end of 2022, there will be more than 2 million
barrels per day of additional refining capacity globally (when
compared with the end of 2019), while demand will be less
than 1 million barrels per day higher.
Asia is expected to see fewer refinery capacity additions
beyond 2024, while regional demand is expected to grow
during this timeframe which could improve margins. There
may be some spikes in refiners’ margins as the supply/
demand balance recovers, however further volatility is
expected. Expert market commentators expect that an
improvement in refining margins will require a recovery
from COVID-19, sustained growth in China and India and
global capacity to reduce through further refinery closures.
Refining NZ’s historical GRM is illustrated in the chart
below, highlighting a downward trend in reported GRM.
The annual average GRM earned over the 10-year period to
31 December 2020 was US$5.84 per barrel.
Singapore-Dubai Complex Margins (historical and forecast) versus Refining NZ’s historical GRM
10
8
6
4
2
0
-2
-4
201020112012201320142015201620172018201920202021202220232024202520262027202820292030
Singapore-Dubai Complex Margin
US$/bbl
forecast
Actual refining Margin
Figure 3 Source: Refining NZ Annual Gross Refining
Margin. The forecast Singapore-Dubai complex margin has
been calculated based on Facts Global Energy (FGE) price
sets
12
using Dubai and Brent crude and Singapore Product
Prices, Very Large Crude Carrier (VLCC) freight to Singapore
and the International Energy Agency’s Dubai complex
refinery yields adjusted for fuel and loss.
Historically, Refining NZ has achieved adequate returns
on invested capital (ROIC greater than Weighted Average
Cost of Capital (WACC)) when the Refining NZ GRM is
above US$7-8 per barrel. The outlook for Singapore Dubai
Complex margins, derived from price sets produced by
FGE, indicate few extended periods of time when the
Refining NZ GRM is expected to be at those levels when
applying historic Refining NZ uplifts.
12
FGE Long Term price-set, November 2020

29

Refining NZ The Explanatory Booklet and Independent Appraisal Report
High comparative cost structure
Despite significant ongoing capital investment, Refining
NZ’s refinery is much smaller, older, and importantly,
less energy efficient than many modern Asian exporting
refineries with which Refining NZ ultimately competes
on an import parity pricing basis. Economies of scale are
critical in the refining industry, with larger refineries able to
achieve significantly lower ‘per litre’ operating costs, or able
to offset low refining margins with returns from other parts
of an integrated processing supply chain. This means that
those refineries remain viable at structurally lower GRMs
than Refining NZ. Some of these competing refineries are
also co-located with petrochemical facilities, which enables
a higher margin to be extracted from additional parts of the
crude oil processed.
Despite strong efforts on controllable costs, Refining NZ
has experienced sustained and substantial increases in its
operating costs, particularly energy and labour costs over
the past 10 years.
As a reference, spot electricity prices in New Zealand have
increased around circa 240% in the last 5 years, from an
average of circa $70/MWh to an average of circa $240/
MWh
13
in the 2021 year to date. Similarly, natural gas spot
prices have increased 135% over the same period, from an
average of circa $6.60/GJ
14
to circa $15.50/GJ current year to
date (although these are a pass-through cost, they impact the
GRM calculation).
This cost escalation is illustrated in Figure 4 below, with major
cost components increasing circa 40% from 2014 to 2019.
13
Five months to 31 May 2021. Source: Spot wholesale electricity prices at Bream Bay node from www.emi.ea.govt.nz
14
Five months to 31 May 2021. Source: MBIE New Zealand nominal average fuel prices www.mbie.govt.nz
Refining NZ’s Operating Cost Escalation – 2014 to 2020
Figure 4
Notes:
[1]: Pass-through costs (Natural gas, sulphur, carbon costs) are excluded from the above chart
[2]: the circa 18% cost reduction in 2020 is a consequence of the 6-week ‘hot-park’ and ‘cyclic operations’ of the refinery resulting
from a sharp reduction in transport fuels demand caused by COVID-19 and a stop to all non-essential spend.
2014 2015 2016 2017 2018 2019 2020
200
180
160
140
120
100
80
60
40
20
-
41
62
26
46
67
72
54
54
77
28
3331
32
41
35
65
48
9%
5%
77
63
74
61
10%
5%
9%
ElectricityLabourOther costs
Operating costs ($m)
Compound Annual
Growth Rate (CAGR)
(2014 - 2019)

Refining NZ The Explanatory Booklet and Independent Appraisal Report

30
This cost escalation, together with the on-going capital
investment required to maintain safe operations, has meant
that Refining NZ has not been able to generate significant
positive free cash flow in years when the GRM has been
weak (below US$7-8 per barrel). With a reduced outlook for
the GRM, Refining NZ’s ability to generate sufficient free
cash flow to pay dividends to shareholders is significantly
reduced. The risks of operating in this manner are set out
in Section 6 (see the “Customer Disputes and Simplified
Refinery Model” risk and “Refining Margin and Exchange
Rate” risk).
A low GRM also impacts Refining NZ’s existing Customers,
since they retain a share of the GRM (30%) and pay a
Fee Floor when GRM is low, impacting on Refining NZ’s
competitiveness. The 30% share is intended to offset their
risk and cost in the supply chain relative to direct product
imports, including coastal shipping costs from the refinery
to regional terminals. These costs have also escalated over
recent years, necessitating higher GRMs for Refining NZ to
remain competitive relative to the alternative import supply
into other New Zealand terminals.
Decarbonisation of the
New Zealand economy
Successive decisions by policy makers have encouraged
a change in the way that New Zealanders think about
environmental and sustainability issues. In 2019, the
Climate Change Response (Zero Carbon) Amendment Act
2019 was passed with bi-partisan support, setting a target for
New Zealand to reduce its net emissions of all greenhouse
gases (except biogenic methane) to zero by 2050.
As a refinery, Refining NZ is currently a significant carbon
emitter, which will make refinery operations increasingly
challenging and costly as Refining NZ’s exposure to the
ETS increases over time. Refining NZ is also exposed to
electricity and gas cost increases with increasing carbon
and supply costs. The refinery also requires New Zealand
markets for the range of products produced from a barrel of
oil, including petrol - demand for which is forecast to reduce
with increasing use of electric vehicles. This is consistent
with a global shift towards more environmental awareness
in purchasing decisions.
Channel Infrastructure’s product mix is expected to be
weighted towards jet and diesel in the future. The Climate
Change Commission’s (CCC) report released in June
2021 highlighted a near-term focus on decarbonisation
of transport through electric light vehicles, with
decarbonisation of heavy transport and aviation fuels
occurring over a longer period of time
15
. The CCC’s report
identified that aviation fuels are particularly challenging
to decarbonise and there is currently no commercially
viable sustainable aviation fuel supply in New Zealand.
The CCC report has recommended that the New Zealand
Government supports low carbon fuels for heavy vehicles
and aircraft including fuel standards and incentives. In June
2021 the Ministry of Business, Innovation and Employment
and the Ministry of Transport issued a discussion document
outlining a proposal to put in place a sustainable biofuels
mandate
16
. As an import terminal, Refining NZ’s existing
infrastructure has the potential to support a transition to
biofuels and sustainable aviation fuels. Refer to Section 2.5.
15
CCC budgets include a near-term focus on increased electrification of passenger vehicles, and a target for biofuel production of 270m litres by 2035
(c.3.5% of forecast total liquid fuel demand including international transport)
16
The proposal is for 1.2% emission reductions from domestic transport fuels in 2023, 2.3% in 2024, and 3.5% in 2025
(https://www.mbie.govt.nz/dmsdocument/15020-increasing-the-use-of-biofuels-in-transport-consultation-paper-on-the-sustainable-biofuels-mandate-pdf)

31

Refining NZ The Explanatory Booklet and Independent Appraisal Report
1.2 Overview of Strategic Review process
Responding to this challenging refining
environment, Refining NZ initiated a Strategic
Review in April 2020 to determine the optimal
business model and capital structure for its
assets to maximise “through the cycle” returns
to shareholders while continuing to deliver
secure, competitive fuel supply to New Zealand.
The first phase of the Strategic Review was to assess the
opportunities to improve the competitiveness of refining
operations in New Zealand and options to separate the
refining and infrastructure assets or convert to an import
terminal business model. The Company engaged extensively
with Customers, Government, and other stakeholders to
inform its assessment of business model options.
In June 2020, Refining NZ announced that it would take
two business model options forward; in the short-term,
a Simplified Refinery to improve the near-term viability of
its current business model, while continuing to evaluate
a possible future staged transition to an import terminal.
The detailed work on the import terminal option included
exploration of potential commercial frameworks with its
Customers who had all expressed a preference for an
import terminal model.
The Simplified Refinery was implemented from early
January 2021 and resulted in refining capacity being
reduced by circa 18% and a cessation of bitumen
production. The workforce was also reduced by
around 25%. Further, details of the Simplified Refinery
model are set out in Section 5.1.
The Customer negotiations in relation to the import terminal
model are being overseen by the Independent Directors
and culminated in agreed non-binding term sheets with bp
and Z Energy. These term sheets document the substantive
commercial terms for the provision of Import Terminal
System (ITS) services and are summarised in Section 2.4.
At the date of this Booklet, negotiations continue with
Mobil based on the term sheets that have been agreed
with other Customers. While negotiations continue in
good faith, it is not known at this time when or if these
negotiations will be concluded. It is expected that TSAs and
Transition Agreements based on these term sheets will be
finalised and executed, preferably with all Customers but
at least a majority of Customers, before a Final Investment
Decision is taken by the Refining NZ Board to approve and
proceed with the Proposal. As noted in Section 3.2, this
is to assist Refining NZ in being able to meet the targeted
date for commencement of import terminal operations by
mid-2022.
It is for these terms that Refining NZ now seeks
the approval of its Non-Customer Shareholders. The
Independent Appraiser has reviewed these terms and
concluded that they are fair to all such shareholders. On
the basis of this approval, Refining NZ intends to conclude
negotiation of the final TSAs and Transition Agreements
with Customers, as more fully explained in Section 2.4.

VOTE IN FAVOUR
Refining NZ The Explanatory Booklet and Independent Appraisal Report

32
2. Channel Infrastructure
business description
Following Conversion from principally a refinery to a dedicated import terminal, the
Channel Infrastructure group would be an owner and operator of highly strategic
infrastructure and expects to generate relatively stable earnings with a focus on paying
out a high proportion of Free Cash Flow as dividends.

33

Refining NZ The Explanatory Booklet and Independent Appraisal Report
2.1 Channel Infrastructure strategy
A new strategic framework (refer to Figure 5 below), will be adopted for the business transformation
from a refinery operator to an infrastructure company.
Channel Infrastructure’s purpose will be to provide reliable, efficient fuel infrastructure solutions
to keep New Zealand moving now and into a low carbon future and deliver sustainable returns for
our shareholders.
Figure 5: Channel Infrastructure NZ Limited Strategic Framework
Channel Infrastructure NZ Limited
“Energy to keep things moving”
Vision
New Zealand’s leading independent fuel infrastructure company

Strategic
Priorities
Leverage existing capabilityTransform to deliver valuePosition for future growth
Refer to section 2.5
• Strong safety
systems and
culture
• Continuous
improvement
• Asset
management
• More reliable
dividend payout
• Diversify access
to capital
markets
• Leverage the
balance sheet
• Realise value
of existing
infrastructure
through import
terminal
conversion
• Leverage
existing
infrastructure
• Marsden Point
energy hub
• Strategic storage
• Repurposing
Marsden
Point site
• Supply chain
optimisation
• Strong
performance
management
• Change-ready
• Future focused
Safe, reliable,
low cost
operations
High
performance
culture
Competitive
cost of capital
Realise
infrastructure
value
Support lower
carbon fuels
transition
Grow and
diversify

PRODUCTS IMPORTED
BY CUSTOMERS

40%
OF NZ'S TRANSPORT
FUELS HANDLED BY
THE ITS
TLF
PETROL AND
DIESEL SUPPLY
INTO NORTHLAND
RAP
JET, PETROL
AND DIESEL
SUPPLY INTO
AUCKLAND
Refining NZ The Explanatory Booklet and Independent Appraisal Report

34
2.2 Import Terminal System
The Import Terminal System (ITS) is expected
to handle between 3 and 3.5 billion litres of
transport fuels annually, primarily servicing the
Northland and Auckland markets, which make up
40% of New Zealand fuel demand.
It would initially comprise the following network of largely
existing infrastructure assets:
• Two deep-water jetties at Marsden Point, with both able
to receive petrol, diesel and jet fuel;
• Approximately 180 million litres of comingled product
storage capacity at Marsden Point, implying discharge
of a typical vessel approximately every five days during
peak seasonal demand;
• The approximately 170km multi-product Refinery to
Auckland Pipeline (RAP) which extends from Marsden
Point to the Wiri Terminal in South Auckland;
• A short pipeline to the truck loading facility (TLF)
adjacent to the Marden Point site; and
• Extensive supporting physical infrastructure at the
Marsden Point site.
The Conversion would result in New Zealand’s transport
fuel requirements being met wholly through the import of
refined fuel products, compared to today where crude oil
is imported for refining at the refinery, complemented by
direct refined fuel imports.
Figure 6 set out below depicts the ITS and the flow of
imported product through the system. Note the TLF and
Wiri Terminal end-delivery points are owned by Refining
NZ’s Customers - and do not form part of the ITS.
Figure 6

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
The ITS would store and deliver product on a co-mingled
basis, meaning that product is offloaded and combined
with other comparable products in the tanks and pipelines
irrespective of Customer ownership. The Customers
are responsible for collectively supplying product at the
required quality specifications and maintaining appropriate
product stock levels at Marsden Point to meet their
market needs. Channel Infrastructure would not own
any of the products stored or moved through the ITS –
ownership remains with the Customers.
The provision of Private Storage Services are also expected
to be agreed with Customers on a bilateral basis. Sitting
outside the ITS for additional value-added service fees,
this would provide Customers with additional flexibility
particularly in relation to freight optimisation through
increased control of available tank capacity. Additional
services may also extend to additive dosing services.
Channel Infrastructure would be responsible for scheduling
product batches to be delivered through the RAP based on
Customer advised demand forecasts, to maintain adequate
stock levels at the Wiri Terminal to meet market needs.
RAP capacity would initially be the constraining factor in
the ITS, and Customers would have priority RAP access.
Channel Infrastructure would have the right to introduce
new customers to the ITS where there is systematic
underutilisation of RAP capacity after the first three years.
Additional detail on the commercial arrangements between
Channel Infrastructure and the Customers is summarised in
Section 2.4.

Import Terminal System
Owned and operated by Wiri Oil Services Ltd
Independent Petroleum Laboratory
OFFICES &
WORKSHOP
FIRE
STATION
JET TANKS
RETENTION
BASIN
BIO-TREATER
BALLAST TANKS
WASTE
WATER
TREATMENT
TRUCK
LOADING
FACILITY
(TLF)
IPL
DIESEL
TANKS
JETTY 1 & 2
REFINERY TO AUCKLAND PIPELINE (RAP)
DIESEL
PETROL TANKS
CONTROL
ROOM
PETROL
TANKS
Refining NZ The Explanatory Booklet and Independent Appraisal Report

36
Figure 7
Figure 7 illustrates the footprint of the proposed
ITS in the context of the current operating refinery.
The ITS would be highly cost competitive relative
to the current alternative for delivering transport
fuels to the core Northland and Auckland markets
via importing fuels into Mt Maunganui and then
trucking it over 200 kilometres by road. The Mt
Maunganui fuel terminals currently only have
capacity to handle a portion of Auckland’s ground
fuels requirements and would require significant
new capital investment in receipt, storage, truck
fleet and road infrastructure in order to handle jet
fuel and the required volumes of petrol and diesel
to be a viable economic alternative.
Beyond Mt Maunganui, the next closest import
facilities are in New Plymouth and Napier, which
are 350 and 400 kilometres respectively away from
central Auckland.

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
2.3 Transport fuels demand outlook
The key driver of long-term ITS utilisation and therefore value is demand for transport fuels.
The transport fuel demand forecasts used in our modelling have been prepared by independent
industry experts Hale & Twomey and are illustrated in Figure 8.
Hale & Twomey’s forecast, issued in January 2021, reflects
a faster transition away from fossil fuels than previously
expected, now factoring in New Zealand’s commitment to
zero net greenhouse gas emissions by 2050. The forecast
is consistent with the decarbonisation pathway proposed
by the CCC in its June 2021 report to the Government. The
Hale & Twomey forecast reflects a change in consumer
sentiment and actions attributable to COVID-19. Further
growth and sustained demand for jet fuel is expected to
underpin long-term ITS utilisation, in contrast to a long-
term decline, initially in petrol and then diesel. The Hale
& Twomey forecasts are for fossil fuels only and make
no assumptions on bio-fuel substitution. The consultation
paper issued by the Government in June 2021 on the
Sustainable Biofuels Mandate proposes a 3.5% reduction
in domestic transport fuel emissions from biofuel uptake
by 2025
17
. As a key part of the transport fuels supply chain
into New Zealand’s largest market (Auckland), the ITS
infrastructure is well placed to benefit from the incremental
volumes of low-carbon transport fuels
18
.
The Business New Zealand Energy Council (BEC) has
recently issued updated energy scenarios (TIMES-NZ 2.0
19
),
with the Tui scenario representing a future in which climate
change is one of several competing priorities and the Kea
scenario representing a future in which climate change
is seen as the most pressing issue. These scenarios are
shown in the above chart as a comparison against the Hale
& Twomey forecast volumes.
A discussion of key drivers underpinning Hale &
Twomey’s NZ demand forecast for each product is
outlined below.
17
Excludes international aviation
18
2nd-generation biofuels are suitable for use on the multi-product RAP, but ethanol-blends (in petrol) are not
19
BusinessNZ Energy Council energy scenarios published in 2021: https://www.bec.org.nz/our-work/scenarios/times-nz-2.0
New Zealand Product Demand (million litres)
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Jet (H&T Jan-2021)
Tui (BEC May-2021)Kea (BEC May-2021)
Petrol (H&T Jan-2021)Diesel (H&T Jan-2021)
202120222023202420252026202720282029203020312032203320342035203620372038203920402041204220432044204520462047204820492050
Figure 8

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38
Jet fuel
Although domestic demand for petrol and diesel
rebounded rapidly to 2019 levels once national and
regional travel restrictions were lifted in 2020, jet fuel
demand remains soft as a consequence of continued
restrictions on international travel.
Domestic air travel has returned to circa 80% of 2019
levels, but domestic travel normally only represents a
small portion of New Zealand’s jet fuel demand (typically
circa 20%) with long-haul international flights normally
accounting for most of New Zealand’s jet fuel demand.
Trans-Tasman flights, and flights to the Pacific provide
incremental jet demand, but this is less material than
long-haul international flights.
It is therefore expected that New Zealand jet fuel demand
will only recover as border controls are gradually relaxed
and long-haul flights return.
While the long-term impacts on international air travel
from the COVID-19 pandemic remain uncertain, there
has historically been full demand recovery after previous
demand shocks e.g. SARS, 9/11, and the 2008 Global
Financial Crisis – see Figure 9 below from International
Air Transport Association (IATA).
20
20
https://www.iata.org/en/iata-repository/publications/economic-reports/an-almost-full-recovery-of-air-travel-in-prospect/
Jet fuel demand growth rates are forecast to return to
historical trends, linked to GDP and wealth-trends. People’s
appetite for travel remains strong (including the tourism,
education, and visiting friends and family sectors) and
the growth in the population of the middle classes who
can afford air travel in Asia is expected to continue. New
Zealand is likely to remain a desirable travel destination.
The Hale & Twomey forecast sees jet fuel demand
returning to 2019-levels by circa 2027. This represents a
slightly slower recovery than the NZ aviation industry’s
current expectation of a return to 2019 demand by
2024/2025. The IATA expectation is for travel demand in the
Asia-Pacific region to return to 2019 levels by 2023, though
this includes significant domestic travel (e.g. within China
and India).
-1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
120
100
80
60
40
20
0
Months after start of shock
Global passenger kilometres flown (RPKs), indexed
2003 SARS
pandemic
1991 global
recession
Sep 11 2001
terrorist attacks
2009 Great
Recession
COVID-19
pandemic
Source: IATA Economics using data from IATA Monthly Statistics. Data is adjusted for seasonality
Indexed, 100 = RPKs at start of shock
Figure 9
Demand shocks do not usually have long-lasting impacts
Previous shocks cut 5-20% from RPKs but recovered after 6-18 months

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
200
180
160
140
120
100
80
60
40
20
0
Passengers, to from & within regions, indexed 2019 = 100
Emerg. Europe: 3.7%
West. Europe: 2.3%
N America: 1.5%
S America: 2.7%
Africa & ME: 5%
Asia Pacific: 5.4%
Source: IATA Economics using data from Tourism Economic/IATA Air Passenger Forecast, April 2021
Indexed, 2019 = 100
Compound Annual
Growth Rate (CAGR)
(2025 - 2030)
The longer-term slowdown in jet fuel demand growth and
eventual decline from the 2040s represents an expectation
of technology improvements and possible fuel substitution
(potentially electric, Sustainable Aviation Fuels (SAF) or
hydrogen fuel cell) for some sectors of air travel.
Any SAF imported into, or manufactured, at Marsden Point,
would likely utilise the same ITS infrastructure as fossil jet
fuel i.e. jetties, tanks and the RAP. The Hale & Twomey
forecast is for fossil fuels only and any future SAF demand
would be incremental to the volumes shown.
Figure 10
Regions with large domestic markets recover first
European, Africa & Middle East regions lag due to international markets

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40
Diesel
Domestic diesel demand is currently stronger than it was in
2019, and demand is expected to continue to grow as the
economy grows. Gross Domestic Product (GDP) growth
is reflective of increased trucking (transport of goods),
forestry, commercial fishing and agriculture - all of which
are key drivers of diesel demand.
The relationship between diesel demand and GDP
growth is expected to weaken over time with improving
fuel efficiency and productivity enhancements,and with
the continuation of the shift in the economy from a
manufacturing economy to a service economy.
Diesel use for light passenger vehicles and light commercial
vehicles is expected to follow a similar reduction curve
as petrol. It is assumed that alternatives (such as electric
vehicles and hybrid vehicles) will replace the existing light
passenger diesel fleet at a similar rate as that for petrol-
powered light vehicles.
The Hale & Twomey forecasts assume that diesel use in
the agriculture, forestry and fishing sectors will only start
reducing from 2030 and decline to circa 25% of current use
by 2050. Heavy transport follows a similar profile to light
transport but with a five-year lag as that technology (whether
electric or hydrogen) is not as advanced or economic. Any
bio-diesel demand will be incremental to the volumes shown.
Petrol
Petrol demand has already returned to 2019 levels. No
further COVID-19 impacts have been included in the Hale
& Twomey forecast although they may occur for periods of
time if major domestic travel restrictions are imposed. The
impacts of such a restriction would likely be short-term only.
The trend for improving fuel efficiency is expected to
continue in the near term, but the main demand erosion will
come from a shift towards using electric vehicles instead
of petrol vehicles over the next two decades. There is also
expected to be an impact from reduced commuting activity
as businesses have become more comfortable with staff
working from home for a portion of the work week.
Auckland and Northland fuel demand outlook
21

The ITS will distribute fuel for primarily the Northland
and Auckland markets. Based on the Hale & Twomey
assessment, the forecast fuel demand in those markets is
shown below:

Note: Based on Hale & Twomey’s forecast, issued in January 2021, which reflects a faster transition away from fossil fuels than previously expected,
now factoring in New Zealand’s commitment to zero net greenhouse gas emissions by 2050. The Hale & Twomey forecast reflects a change in consumer
sentiment and actions attributable to COVID-19. Further growth and sustained demand for jet fuel is expected to underpin long-term ITS utilisation, in
contrast to a long-term decline, initially in petrol and then diesel. The Hale & Twomey forecasts are for fossil fuels only and make no assumptions on biofuel
substitution. The Business New Zealand Energy Council (BEC) Tui and Kea scenario implied year on year growth rates have been applied to anticipated
Auckland+Northland petrol and diesel volumes from 2023 (Hale & Twomey) and to jet from 2026 (to accommodate Covid-19 jet demand recovery).
21
Mid-case demand scenario developed by Hale & Twomey. Includes some supply from Wiri into the Waikato.
Figure 11
3,500
3,000
2,500
2,000
1,500
1,000
500
-
Auckland + Northland product demand (million litres)
JetPetrol Diesel
202120222023202420252026202720282029203020312032203320342035203620372038203920402041204220432044204520462047204820492050
Tui (BEC May-2021)Kea (BEC May-2021)

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
2.4 ITS commercial agreements
Refining NZ has been negotiating with existing
Customers the commercial terms for provision
of ITS services under a Terminal Services
Agreement (TSA). As at the date of this Booklet,
Refining NZ has reached in-principle and non-
binding agreement on key commercial terms
with bp and Z Energy, and negotiations with
Mobil are ongoing on the basis of those terms.
The summary below reflects the key commercial terms
agreed in principle and on a non-binding basis with bp and
Z Energy, as well as expected transitional arrangements
under a separate Transition Agreement.
While the in-principle and non-binding commercial terms
are not exhaustive, matters which are still to be agreed
should not materially impact the assessment of economic
value of the TSA or Transition Agreement to Refining NZ.
They are largely operational in nature, such as finalisation of
delivery scheduling and product comingling rules required
for the effective operation of the ITS.
Refining NZ is seeking shareholders’ approval to provide
ITS services to all of the Customers on the basis of the in
principle and non-binding agreement reached with bp and
Z Energy as outlined below, in parallel with negotiating
binding TSAs and Transition Agreements with all Customers
in line with the key terms outlined below and covering
all outstanding matters. While negotiations continue in
good faith, it is not known at this time when or if these
agreements will be concluded.
Shareholders are not prejudiced by this approach, as
Refining NZ would seek again shareholders’ approval
to any terms ultimately agreed with Customers (or their
nominees), including with respect to the terms negotiated
with Mobil, if they do not reflect the Proposal outlined in
this Booklet and/or the ultimate outcome described in
this Booklet.
ITEMKEY TERMS
Conditions
The TSA is subject to the following material conditions being satisfied or waived including:
• Each Customer signing a TSA and Transition Agreement (see below);
• Import terminal safety case acceptance by WorkSafe; and
• Refining NZ giving a minimum period of notice to the Customers of the commencement date for ITS
services (Services Effective Date).
If these conditions are not satisfied or waived, the Services Effective Date would not occur and
Refining NZ would continue to operate as a Simplified Refinery until the conditions are satisfied or waived
or the TSAs are terminated by Customers (see below under Termination Rights).
Scope of services
Refining NZ will provide three categories of services, as set out below:
Core ITS services will include:
• Operating and maintaining the ITS;
• Priority vessel berthing rights at Marsden Point jetties for ITS customers;
• Discharge of product from vessels and storage in tanks at Marsden Point;
• Scheduled delivery of product to the TLF and via the RAP to the Wiri Terminal (with the Wiri Terminal
and TLF delivery point agreements updated to reflect the provision of services under the TSA); and
• Product accounting services.
Ancillary Services
As requested by Customers and for additional fees to be agreed, including:
• Jet fuel certification;
• Other product-specific activities;
• Ad-hoc reloading of product onto vessels and off-specification product management support.
New Services
Customers may request a new service associated with the ITS (e.g. an expansion or enhancement of the
ITS), with additional fees to be agreed on a case by case basis. These new services may include private
storage (refer Section 4.5 for further details).
Private Storage Services would be subject to additional fees and would otherwise be subject to all
relevant provisions of the TSA.

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42
ITEMKEY TERMS
Fees
From the Services Effective Date, Customers will pay monthly fees comprising fixed and variable
components (further described in Section 4.2):
• Fixed Fee – with a per customer base fee and the balance allocated to customers based on their
relative ITS utilisation, stepping down over the TSA term;
• Throughput Fee – based on actual customer volumes handled, with some differentiation between
components of the ITS utilised (i.e. wharfage, TLF and RAP) and differential RAP fees based on
product flow rates.
Ancillary Services and New Services (if any) will be charged in addition to the monthly Fixed Fee and
Throughput Fee.
Take or Pay (ToP) Fee: To the extent the amounts below are higher than the aggregate of the annual
Fixed Fee, Throughput Fee and Ancillary Services Fees, Customers will make top-up payments to provide
a minimum aggregate (take-or-pay) fee (on a real basis) of:
• $100 million per year for the first 36 months from the Services Effective Date;
• $90 million per year for the following 36 months; and
• $65 million per year for all subsequent years.
Each Customers’ obligation to the ToP Fees is based on its relative ITS Utilisation.
Any efficiencies achieved between the initial best estimate of transition and conversion costs of $200m and
actual cost will be shared on a 50/50 basis with Customers up to the amount of ToP Fees payments made.
Reductions in ITS operating costs achieved compared with initial estimates will be shared on a 50/50
basis with Customers through reduced fees in any renewal of the TSA or earlier as a result of specific
Customer initiatives.
Fee indexation
All fees will be subject to annual indexation in accordance with the 12-month change in the Producers
Price Index (PPI) ‘Outputs, All Industries’ published by Statistics NZ.
Term and
renewal rights
The TSA will have an initial term of 10 years from the Services Effective Date, with two rights of renewal
for a further 5 years, each on the same terms and exercisable at the Customer’s discretion. If not
renewed, transitional provisions will apply for 12 months to enable necessary supply chain changes to be
made by the Customers.
Key performance
indicators (KPIs)
ITS service performance will be measured against specific performance criteria which directly relate to
the effective and efficient operation of the ITS (e.g. vessel unloading, RAP pumping and RAP scheduling).
Non-compliance with specified performance criteria may result in liability to Customers for prescribed
amounts, subject to caps.
Permitted
interruptions
ITS operations will be subject to a regime for planned and unplanned maintenance. This regime will
specify permitted maintenance timeframes which differentiate between components of the ITS (i.e. jetty,
tanks, TLF pipeline and RAP). ITS unavailability outside these timeframes due to Refining NZ’s act or
omission may result in liability to Customers for prescribed amounts, subject to a cap.
Liability and
limitations of
liability
Refining NZ’s liability to the Customers will be based on the standard of a Reasonable and Prudent Terminal
Operator (RPTO), the occurrence of product losses, ITS availability, agreed KPIs (as referred to above) and
the Co-mingling Rules to be agreed between Refining NZ and all Customers.
For non-compliance with the RPTO standard, the TSA will provide that Refining NZ’s liability is limited to a
cap based on the greater of an agreed amount or any applicable insurance proceeds received by Refining
NZ, unless Refining NZ wilfully defaulted or was grossly negligent or fraudulent.
The parties to the TSA will be liable to one another for the reasonable rectification costs for damage to each
other’s assets, and the TSA will include caps, limitations and exclusions of liability for various circumstances,
including in relation to liability for indirect and consequential losses. Negotiations with Customers are
continuing whether to retain the existing indemnity under which the Customers indemnify Refining NZ for
all claims made by third parties against Refining NZ in respect of jet fuel supplied to them, above US$50m.

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
ITEMKEY TERMS
Third party
access
After the first 36 months following the Services Effective Date, the Company may offer new
customers unutilised RAP capacity. RAP utilisation will be determined having regard to historical
seasonal peak demand.
All new customers must meet defined financial and operational / technical criteria and make arrangements
for use of the Wiri Terminal assets and / or TLF (or other relevant downstream assets) for receipt of
product from the ITS.
Freedom of
future operation
Refining NZ will be entitled to conduct any other business it wishes to conduct, provided that it continues
to meet its obligations under the TSA including priority jetty access for ITS Customers, exclusive access
to ITS storage tanks and the TLF and RAP pipelines.
New laws and
regulations
ITS fees may be adjusted in accordance with the TSA to reflect the cost-impact of new or changes in laws
or regulation that increase the cost of providing the ITS services to customers. Any increase in fees would
either be on a cost-recovery or return on investment basis.
Termination
rights
The TSA will have no termination for convenience provisions, but it can be terminated for cause in certain
circumstances (i.e. default in payment of money, unauthorised assignments, insolvency events, and
extended force majeure events). The TSA may also be terminated by Customers if the Services Effective
Date is beyond an agreed long-stop date.

Transition Agreement
The purpose of the Transition Agreement is to set out the terms on which refinery operations will be rundown and ITS
services ramped up (see Section 3.3) between the TSA being signed and the Services Effective Date. On the Services
Effective Date, the Processing Agreement will be terminated (subject to certain residual obligations), and the TSA agreed
with that Customer will be in full effect. The proposed key terms of the Transition Agreement, which remain subject to
negotiation with Customers, are summarised below:

ITEMKEY TERMS
Pricing
Processing Agreement pricing for refining services will apply up to the Services Effective Date and ITS
pricing under the TSA for ITS services will apply from the Services Effective Date. The pricing obligations
under the Processing Agreement and TSA will not chronologically overlap.
Refinery
Rundown Plan
Refining NZ will develop, consult on, and provide to Customers a Refinery Rundown Plan to facilitate the
shutdown of the refinery (see Section 3.3) and optimise product yield during the process. The Refinery
Rundown Plan may amend the Processing Agreement by the temporary imposition of some additional
operating constraints to facilitate the Conversion.
ITS Ramp-up Plan
Refining NZ will provide an ITS ramp-up plan to Customers which sets out the process and timing of
the matters set out in Section 3.3. Ahead of the Services Effective Date, it is likely that product imports
will commence so that product distribution to the market is maintained uninterrupted throughout the
transition activities, subject at all times to operational feasibility.
Termination
of Processing
Agreements
The Processing Agreements terminate on the Services Effective Date. However, as all refinery related
hydrocarbons will not have been removed from Refining NZ’s facilities by that time, certain provisions of
the Processing Agreement will continue in effect until that occurs (e.g. operational matters for hydrocarbon
removal, hydrocarbon ownership, invoicing, payment, liability and dispute resolution processes).
Customers must remove (whether by export or otherwise) any such hydrocarbons and removal costs will
be for each Customer’s account.
It is expected that upon conversion to an import terminal, all unresolved Dispute Notices under the
Processing Agreement issued by Customers (in relation to the simplification of the refinery) or by
Refining NZ (in relation to the Fee Floor) will be permanently withdrawn without liability.

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44
2.5 Position for future opportunities
Following the initial focus on a safe and planned
transition to an import terminal, a strategic
priority for Channel Infrastructure will be to
grow and diversify its asset base.
The Marsden Point site is highly strategic with its recently
confirmed 35-year industrial resource consent, deep water
jetty access, industrial utility connections (electricity,
water and natural gas), extensive on-site infrastructure
and proximity to New Zealand’s largest population base in
Auckland. The ITS would only utilise approximately 35%
of usable land at Marsden Point and approximately 20%
of existing tank capacity, giving rise to a range of potential
growth opportunities through repurposing of the Marsden
Point site.
Although at an initial stage of assessment and subject to
further refinement and change, identified diversification and
growth opportunities focus on the following:
• Flexibly developing Marsden Point as an energy hub as
part of decarbonising New Zealand’s fuels and energy
markets; and
• Leveraging Channel Infrastructure’s capabilities
and position as the independent operator of fuel
infrastructure in New Zealand, across a broader
asset base.
Strategic fuel storage
The refining operation requires large inventories of crude oil
and intermediate product components, making up around
18 days’ cover for New Zealand’s fuel demand. During the
Conversion to an import terminal these stocks would be
drawn down, significantly reducing New Zealand’s domestic
fuel inventories, and also resulting in Channel Infrastructure
having surplus tank capacity for refined oil products (subject
to conversion works – see Section 4.5).
The New Zealand Government is continuing to assess
the fuel security implications of no longer having a domestic
oil refinery, including its policy position on domestic
fuel stockholdings. In light of recent Australian refinery
closures, the Australian Government has announced new
fuel security measures, including a domestic stockholding
obligation, to address fuel security. If a similar approach
were to be adopted in New Zealand, Refining NZ would be
strongly positioned to support these requirements with its
existing tankage and proximity to the Auckland market.

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
Growth in electricity
Refining NZ today purchases its electricity via the national
grid under both short and longer-term contracts. The
electricity requirements of the ITS would be circa 85%
lower than for current refinery operations but would still
represent a significant portion of the expected import
terminal’s operating costs.
On 30 October 2019 Refining NZ announced to the market
its development of shovel-ready plans for a 26MW solar
project called Maranga Ra to be located on Company-owned
land adjacent to the main refinery site. The project was
subsequently placed on hold due a drop in GRMs and the
commencement by Refining NZ of its Strategic Review.
A combination of factors including advances in solar and
battery technology and current wholesale electricity and
transmission/distribution price dynamics could mean some
variation of this project remains an attractive investment
proposition for Channel Infrastructure – either on a
standalone basis or with partners. In combination with a
battery solution, the project could have the potential for
Marsden Point to have a self-sufficient and wholly renewable
source of electricity and reduce or remove its exposure to
electricity supply, transmission and distribution costs.
Other repurposing of the
Marsden Point site
The Marsden Point site, which adjoins the Northport site,
has a wide range of other potential uses with its deep-
water jetty and industrial land. These opportunities may
include the importation of other products such as fuel oil,
bitumen and LNG or as part of Northport’s proposed future
expansion of its port operations.
Optimisation of fuels supply chain
The national fuels supply chain comprises a network of
terminals in nine regional ports, as well as various strategic
infrastructure assets including the truck loading facility
(TLF) at the Marsden Point terminal, the Wiri Terminal in
South Auckland and Wiri to Auckland Airport pipeline, and
the Woolston pipeline connecting the Lyttleton terminal
to Christchurch. These assets are variously owned and
operated by the Customers and other partners.
After shifting its business model from a refinery operator
to an infrastructure operator, Channel Infrastructure
would be well placed to leverage its skills as a specialist
infrastructure owner and operator across other shared fuel
infrastructure assets. Refining NZ anticipates that a reduced
cost of capital and operational synergies from consolidated
asset management processes across multiple terminals,
could provide the opportunity for earnings growth and
shareholder value.
Transition to future fuels
The CCC’s advice to Government identifies electrification
as the primary decarbonisation pathway for light vehicles
over the next 30 years, while biofuels (including sustainable
aviation fuel solutions) and hydrogen-based solutions, are
expected to be required to decarbonise heavy transport,
aviation and shipping.
Jet fuel and diesel accounted for almost half of the
volume carried via the RAP in 2019 (pre-COVID-19). Jet
fuel demand is expected to rebound and then gradually
increase over the foreseeable future, in line with future
growth in New Zealand’s tourism industry underpinning
long-term ITS utilisation. This, coupled with the RAP being
the lowest carbon intensive option to distribute liquid
fuels into Auckland, would position Channel Infrastructure
to play an active role in supporting a future transition to
alternative fuels. This could include the import or production
of biofuels, including sustainable aviation fuel and hydrogen
at Marsden Point.

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46
VOTE IN FAVOUR
3. Implementation and
timing for Conversion to
an Import Terminal

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
Shareholder approvals
Shareholder
Meeting
Final Investment
Decision
Key
Import Terminal
Commencement
Approvals
June - Sept 2021
Implementation
FID to first half 2022
Approval
requirements
Operational
requirements
Commercial negotiations
Lender approvals
Capital projects – design
Terminal planning
Workforce planning
Refinery shutdown planning
Workforce deployment
Terminal establishment
Capital projects – design
& construction
Capital projects – construction
Workforce implementation
Terminal operation
Refinery shutdown
& decommissioning
Site repurposing
Site repurposing – opportunity identification
3.1 Timetable summary
To implement the Proposal, Refining NZ requires several approvals (Approval Requirements) and a
number of operational changes (Operational Requirements). The Proposal will only be implemented if
both the Approval Requirements and Operational Requirements are satisfied. In addition, a Restructure
is proposed, which (if it proceeds) may occur before or after commencement of terminal operations.
Figure 12 highlights the required steps in the lead up to and following commencement of the terminal operations with an
overview of the transition process discussed below.
Overview of the Transition Process
Note: After becoming an import terminal, Refining NZ would have a number of decommissioned assets that would eventually require demolition. Some
demolition works would be completed immediately following the refinery shutdown and decommissioning activities highlighted above, with full demolition of
the redundant assets expected to be deferred for a number of years.
Figure 12

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48
3.2 Approval Requirements
Binding legal agreements with
Customers (including TSA)
The summary of the proposed Import Terminal System
(ITS) key commercial terms are set out in Section 2.4.
As at the date of this Booklet, Refining NZ has reached
in-principle and non-binding agreement on key commercial
terms with bp and Z Energy, and negotiations with Mobil
are ongoing on the basis of those terms. Refining NZ and
its Customers are also currently negotiating the Terminal
Services Agreement (TSA) and Transition Agreements. This
is expected to occur over the next 2-3 months. As noted in
Section 2.4 the matters which are still to be agreed should
not materially impact the assessment of economic value
of the TSA or Transition Agreement to Refining NZ and are
largely operational in nature.
It is expected that the TSAs and Transition Agreements will
be finalised and executed with preferably all Customers
before a Final Investment Decision (FID) is taken by
the Refining NZ Board to approve and proceed with the
Proposal. A FID is being targeted by end Q3 2021, which
would enable Core ITS Services to begin by mid-2022,
avoiding the need to undertake a turnaround of the refinery
hydrocracker at an estimated cost of approximately
$25 million.
If it is not possible to finalise and agree a TSA and Transition
Agreement with a Customer by the end of Q3 2021, the
Board may decide to proceed to FID with at least a majority
of Customers having executed final TSAs and Transition
Agreements. In this way, Refining NZ would be better able
to meet the targeted date for closure of the refinery and
commencement of import terminal operations by mid-2022,
so as to avoid the turnaround cost.
This would mean that pending the final Customer executing
a final TSA and Transition Agreement, the existing
Processing Agreement will continue to apply in respect of
that Customer (including obligations on Refining NZ to make
available refinery capacity, and on the Customer to submit
feasible refinery programs, pay Processing Fees and the Fee
Floor (if applicable), and rights of the Customer to terminate
its Processing Agreement on notice) until agreement is
reached on the TSA and Transition Agreement.
Refining NZ would only consider proceeding in this manner
if it is satisfied that agreement will be reached on a TSA
and Transition Agreement with the Customer in question.

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Shareholder approval
As more fully explained in the accompanying Notice of
Meeting, two Resolutions of shareholders are required:
• Under NZX Listing Rule 5.1.1 and section 129 of the
Companies Act 1993, given the cost of implementing
the Conversion, the assets to be disposed of, the value
of the TSA’s and Transition Agreements and the change
in the nature of Refining NZ’s business, shareholder
approval of the Proposal as a whole (including the
Restructure) is required by way of special resolution
(being the approval of a majority of 75% of the votes
cast by shareholders entitled to vote and voting).
All shareholders can vote on this Resolution and,
as explained in the Notice of Meeting, shareholders
who vote against the special resolution may exercise
a minority buy-out right if the resolution is passed in
accordance with the Companies Act 1993.
• Under NZX Listing Rule 5.2.1, Transactions
with Related Parties, Refining NZ is required to
receive approval from unrelated parties (i.e. Non-
Customer Shareholders) to provide ITS services to the
Customers, who are Related Parties of Refining NZ
and the transitional arrangements from the provision
of oil refining services under the existing Processing
Agreements. This Booklet and the Independent
Appraisal Report (included as Appendix A) are intended
to assist Non-Customer Shareholders to make an
informed decision on whether to vote for the Proposal.
The implementation of the proposed import terminal will
not commence without approval from Non-Customer
Shareholders. To be passed, this Resolution requires
the approval of a simple majority of the votes cast by
shareholders entitled to vote and voting and excludes
the votes of Customers and their Associated Persons,
who may not cast their votes in favour of this Resolution.
The Independent Directors unanimously recommend
that shareholders vote in favour of all Resolutions put
before the Meeting.
Lender approval and financing
Refining NZ requires approval from each of its bank
lenders to the Proposal, otherwise the Proposal cannot
proceed. Lender consent will be sought in parallel with the
shareholder approval process outlined above. There is no
requirement for subordinated bondholder consent.
Refining NZ has received credit approval to extend a
facility maturing in 2021 and for additional bank facilities to
provide liquidity support over the initial conversion period,
subject to conclusion of satisfactory documentation and
satisfying conditions precedent.
With this additional funding, Refining NZ anticipates
maintaining facilities of around $400 million through the
conversion period as outlined in Section 4.9.
Final Board approval
As the final form of the TSA and Transition Agreement
(refer to Section 2.4) together with the Front-End
Engineering and Design (FEED) and associated work remain
to be completed (refer to Section 3.3), proceeding with the
Proposal remains subject to final Board approval by way of
the Final Investment Decision.
Regulatory approvals
The Proposal is not conditional on any regulatory approvals.
However, as noted in Section 2.4, the TSA itself is
conditional on a new safety case being accepted by
Worksafe so as to conduct terminal operations. As noted
in Section 3.3, some operational details remain to be
agreed, therefore this condition is required so that when
they are finalised the safety case can be obtained for
terminal operations.
Although NZ RegCo has reviewed and does not object
to this Booklet, NZ RegCo takes no responsibility for any
statement in this Booklet.

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50
3.3 Operational Requirements
In parallel with the approvals processes and commercial
negotiations, Refining NZ will be focused on building the
new capabilities and managing the significant organisational
changes that will occur on site during the transition:
• In the period up to the FID, Refining NZ will be
completing the necessary design and planning work
to underpin this decision by its Board (e.g. FEED work);
• Following a decision to move to an import terminal
operation, the focus will shift to the execution to
deliver the elements of the transition necessary
for the efficient operation of the terminal at the
commencement date, while maintaining refinery
operations. This work includes delivery of capital
projects, developing terminal systems and processes,
and managing the workforce transition; and
• At refinery closure, the terminal will commence
operation, while the refinery process plants will shut
down, and the decommissioning of the redundant
equipment will be completed.
A description of the major elements of the transition
activities is provided below.
Capital projects
A portfolio of capital projects will be designed, constructed,
and commissioned to support the new terminal. The
major projects involve fire system and bund upgrades
to the terminal tanks, with a number of additional minor
projects aimed at improving the operability, flexibility, and
optimisation of the terminal to better serve customers. The
minor projects will largely be complete prior to the refinery
closure, with the fire system and bund upgrades continuing
for several years.
Conversion of tanks for Private Storage Services would
occur in parallel with ITS capital projects.
Terminal planning and
establishment
Refining NZ will be establishing the required organisation,
systems and processes to support the terminal. Key
deliverables will include developing an organisational
design for the workforce, the selection and training
of the terminal personnel and the development of the
operating, maintenance and safe work processes and
procedures to maintain safe and reliable operations on the
site. Key regulatory requirements will include an updated
safety case to meet the requirements of Worksafe. It is
anticipated that the workforce and systems will draw from
existing refinery resources, adapted to be fit-for-purpose in
a terminal environment.
Refinery shutdown planning and
decommissioning
Refining NZ is planning the safe and efficient shutdown
of the refinery and the subsequent decommissioning of
redundant assets which are not suitable for repurposing
(see below under “Site repurposing and remediation”).
This includes the de-inventorying, de-energising and
isolation of these assets to leave them in a safe condition
for future demolition or other uses. These assets include
the refinery processing plants, surplus tanks, piping and
other equipment not required for terminal operation and
redundant utility infrastructure including boilers, gas, and a
portion of the electrical system.
The plan aims to maximise the recovery of all hydrocarbons
into either product for sale by Customers or aggregated for
future re-processing by Customers.
See Section 4.6 for information regarding the
estimated expenditure associated with the conversion
decommissioning of refinery assets, together with the
estimated timeframes involved.
Workforce planning and
deployment
The effective transition of the existing refinery workforce
is a critical component of the Conversion. Refining NZ
is committed to safe and effective operations from FID
through Conversion and beyond, including a focus on
managing operational and technical risks and the change
management related to enabling teams to collectively ramp
down existing operations.
As a result of the transition, the current Refining NZ
workforce of 300 is expected to reduce over the two years
following commencement of import terminal operations to
approximately 60 terminal, Independent Petroleum Laboratory
Limited (IPL) and corporate support office employees. During
this transition period, there will be an ongoing requirement for
a workforce to support the shutdown and decommissioning
of the refinery site, execution of the capital projects and
other transition related activities. Workforce planning remains
subject to employee consultation.

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
Most importantly, Refining NZ is developing and will
implement strategies to support employees and their
families impacted through this period of transition, with
wellbeing, career guidance and other support programs.
This will underpin the safe and effective operation of
the refinery through to the Conversion and support our
people through this change. Refining NZ is working with
other members of the Refinery Transition Working Group
including central Government, regional and local councils,
Northland Inc, Iwi and unions, with the objective of
ensuring a planned transition for future changes at Marsden
Point which mitigates the impact of changes on refinery
workers and the regional economy.
Site repurposing and remediation
Following the refinery closure, the Marsden Point site is
well situated for future opportunities. With a deep-water
harbour (approximately 14 metre draught), proximity to
the large Auckland market and a strong infrastructure
footprint, the site is well placed for repurposing as a fuels
and energy hub. Refinery assets will be assessed for their
future potential use and may be mothballed rather than
decommissioned, based on this assessment, and subject to
risk mitigation controls.
Assets not suitable for any repurposing initiatives, will
ultimately require demolition as noted above.
It is anticipated that a small demolition project will
be completed soon after the completion of the
decommissioning activities to make safe any higher risk
assets. The full demolition of decommissioned refinery
assets is not expected to be undertaken for a number of
years after the potential repurposing options for the site
have been assessed.
The Marsden Point site consents recently granted allow
continued operation as a refinery and terminal for a 35-
year term. As part of this process Refining NZ undertook
an assessment of the environmental impacts associated
with continued operations at Marsden Point. This included
assessing the effects of its activities on the harbour, land,
air quality and the surrounding community.
As a condition of the resource consent, Refining NZ has
committed to continuing to ensure the site maintains the
current level of environmental standards. Environmental
measures at Marsden Point include the operation of
a groundwater hydraulic containment system and a
hydrocarbon recovery program reducing the extent of
legacy contamination over time – as part of the ongoing
remediation of the site. As a condition of the resource
consent, Refining NZ has also committed to work with the
Northland Regional Council ahead of time to plan for an
orderly wind-up of operations, should refinery and import
terminal operations on site cease in the future, to ensure
on-going compliance with the conditions of the consent.

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Shareholders
The New Zealand Refining
Company Limited
(to be renamed Channel
Infrastructure NZ Limited with
ticker code CHI)
Channel Terminal
Services Limited
Independent
Petroleum
Laboratory Limited
Maranga Ra
Holdings Limited
The New Zealand
Refining Nominees
Limited
- Specialist fuels testing,
testing laboratories
based at Marsden Point
and in Taranaki
- Custodian of the NZ
Refining Company
Defined Benefit Pension
Plan assets
- Listed entity, with ticker
code NZR currently trading
as Refining NZ
- Holding Company
- Development of potential
solar farm on land owned
by Refining NZ, adjacent
to the Marsden Point site
- Operator of Marsden
Point Terminal and RAP
3.4 Internal restructure
As part of the implementation of the Proposal,
the Company is also considering a restructure of
its assets and its corporate group. The Company
is considering a transfer (whether by way of
sale or long-term leases or licences) of some
or all of its assets and liabilities to a wholly
owned subsidiary of the Company (either a new
subsidiary or in an existing subsidiary), with the
refining assets and liabilities remaining with
Refining NZ (Restructure). The intention is that
the ITS would be operated by a company that is
focused on that purpose. The Restructure would
not result in the transfer of any assets to a third
party outside of the Group.
The Company is still in the assessment stage, and the
Board will decide whether to proceed with the Restructure
at the time of the FID.
The Restructure is part of the Proposal and shareholders
will be approving the potential Restructure as a major
transaction under the Companies Act 1993 in voting on
Resolution 1. However, as noted above, the Company will
not be bound to undertake the Restructure.
Figure 13 illustrates the Group’s corporate structure
following the Restructure.
Figure 13
Proposed Corporate Structure following the Restructure

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
4. Import Terminal
financial information
VOTE IN FAVOUR

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54
4.1 Overview
The Import Terminal System (ITS) is expected
to have a relatively simple and stable
infrastructure-like revenue model, with Terminal
Fees for Core ITS Services comprising both a
fixed and variable (based on actual throughput
volumes) component.
Operating expenses are expected to be largely fixed
resulting in relatively stable EBITDA, which coupled with
the Company having access to significant tax losses,
should result in high conversion to free cash flow. Improved
earnings visibility will be further underpinned by minimum
take-or pay commitments which step down over time.
ITS transition costs would be incurred both in the period
up to commencement of import terminal operations,
and in the subsequent five to six years as the refinery
is decommissioned and the ITS is upgraded. Refining
NZ expects to recommence paying a regular dividend to
shareholders once Net Debt/EBITDA is below 4.5 times,
which is expected to be one to two years following
commencement of terminal operations.
Refining NZ is not required to provide pro-forma financial
information for the Simplified Refinery model or the import
terminal business. Further, Refining NZ does not consider
that this information will be useful to shareholders, as it will
not assist them in better assessing the long term value of a
business model change as contemplated by the Proposal,
taking into account the impact of COVID in FY2020 (in
particular the impact on jet fuel).

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
4.2 Revenue
As an import terminal, Refining NZ would
earn most of its revenue from Terminal Fees
under the Terminal Services Agreements (TSA)
(refer to Section 2.4 for a detailed summary
of the terms under which ITS services will be
provided). Terminal Fees will be the higher of
the annual ToP Fee or the aggregate of the
annual Fixed Fee plus the Throughput Fee and
any Ancillary Services Fees. All fees will be
subject to annual indexation.
Take-or-Pay Fee (ToP)
An annual ToP Fee would operate for the period of
the TSAs. Figure 14 below shows the ToP Fee (before
annual indexation) stepping down at 36 months after
commencement of terminal operations and then at
72 months after commencement of terminal operations.
The amount of each Customer’s share of the ToP Fee will
be based on their relative ITS utilisation.
Fixed Fee
An annual Fixed Fee would consist of an annual base
access fee per Customer, plus an annual shared access
fee payable by each Customer based on their relative ITS
utilisation. A total Fixed Fee of $45 million (before annual
indexation) in the first 36 months would step down during
the term of the contract as per Figure 14.
Annualised Fixed Fee and ToP Fee over initial contract term
Figure 14
120
100
80
60
40
20
0
0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96 102 108 114 120 126 132 138 144 150 156 162 168 174 180 186 192 198 204 210 216 222 228 234 240
Months Channel Infrastructure is OperationalFixed Fee Take-or-pay
Annualised Take-or-pay Fee (Before annual price indexation adjustments , $m)
$100m ToP
$45m Fixed Fee
$40m Fixed Fee
$35m Fixed Fee
$90m ToP
$65m ToP
First right
of renewal
Second right
of renewal
End of
TSA

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56
Throughput Fee
The Throughout Fee would be calculated on a cents
per litre basis, with separate charges for wharfage and
product delivery to either the truck loading facility (TLF) or
via the Refinery to Auckland Pipeline (RAP) to Wiri (with
RAP fees also differentiated by product type based on
differential flow rates).
As an example of the calculation of the Throughput Fee,
based on the Hale & Twomey forecasts outlined in Section
2.3, assuming terminal volumes of 2.8 billion litres in 2023
(comprising 1 billion litres jet fuel, 0.9 billion litres petrol
and 0.9 billion litres diesel), the Throughput Fee would be
circa $50 million.
Assuming this level of Throughput Fee (and excluding any
Ancillary Services Fees), the components of the Terminal
Fees for 2023 would be as follows:
COMPONENT OF TERMINAL FEE
(IN REAL TERMS)
VALUE OF
TERMINAL FEE ($M)
ToP Fee100
Fixed Fee45
Throughput Fee50
Total Fixed Fee + Throughput Fee95
Terminal Fee (higher of the above)100
The ToP Fee set out in Figure 14, is the minimum level of
income that Channel Infrastructure would earn in each of
those years. The table set out above, demonstrates that
if the combination of the Fixed Fee and Throughput Fee
(and any Ancillary Services Fees) is greater than the
ToP Fee, then the higher amount would be earned as
terminal revenue.
Given the uncertainty in future fuel volumes, the
Throughput Fee may be different to what is calculated
above
22
. (refer to Section 6 under “Product Demand” risk).
Jet fuel volumes are challenging to forecast given current
constraints on international travel and uncertainty on the
timing of relaxation of international border restrictions.
Using the 2023 scenario outlined above, Figure 15
illustrates the volume sensitivity impacts to the Terminal
Fee assuming a +/-10% change to total fuel volumes
and jet volumes only. Assuming a +/-10% change in total
volume, while maintaining the same product mix, the
Throughput Fee would fluctuate +/- $5 million. Similarly,
assuming a +/-10% change in jet fuel volumes only, the
Throughput Fee would fluctuate +/- $2 million. Under
both downside volume scenarios, the Fixed Fee and
Throughput Fee is lower than the ToP Fee in the first
3 years (excluding any Ancillary Services Fees) and thus
the Terminal Fee would be equal to the ToP Fee.
Channel Infrastructure annual revenue sensitivities to changes in volumes:
22
Both the ToP Fee and Fixed Fee are unaffected by changes in volume
Figure 15
Total volume sensitivityJet volume sensitivity
$120
$100
$80
$60
$40
$20
$0
$46
$45
$56
$101
$94
$98
$91
$45
$49
$45
$53
$45
Fixed Fee Variable Fee ToP fee ($100m)
$M
-10%+10%-10%+10%

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
As highlighted in the above chart, electricity represents a significant proportion of overall operating costs, with an expected
load of circa 4-4.5 MW. It is noted that there is significant uncertainty with respect to both supply, transmission and
distribution pricing in the future as outlined in Section 6 (see the ‘Customer Disputes and Simplified Refinery Model’ risk).
Figure 16
Note: Overhead costs include Director fees and expenses, shareholder costs, listing fees, internal and external audit, annual reporting costs.
In addition to the Terminal Fee outlined above, Refining NZ expects to earn revenue from:
• Its wholly owned subsidiary, Independent Petroleum Laboratory Limited (IPL) for the provision of laboratory testing
services to third parties of approximately $4 million per annum;
• The lease of the Wiri Terminal up until 2025 of approximately $6 million per annum; and
• Private Storage Services arrangements with Customers, which will be priced on a value accretive basis having regard
to estimated incremental cost to convert and refurbish existing tanks in line with Customer requirements (notably
capacity required by product type) and periodic maintenance costs (refer to Section 4.5).
4.3 Operating expenses
Excluding any one-off Conversion related costs (refer to Sections 4.5 and 4.6 below), the Company
expects operating expenses for Channel Infrastructure (including IPL) to be in the order of $35
million per annum. These cost estimates remain subject to completion of ongoing Front-End
Engineering and Design (FEED) and detailed planning work prior to Final Investment Decision (FID).
The breakdown of operating expenses is shown in Figure 16.
ElectricityLabour CostsSite Operation costsOverhead
Channel Infrastructure Group Operating Costs

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58
4.4 Capital expenditure and depreciation
Maintenance capital expenditure requirements for the import
terminal will be significantly lower than the current refinery
operations. Post Conversion capital expenditure is expected
to be $5 million to $10 million per annum (in real terms), of
which a significant portion relates to tank maintenance.
The import terminal’s asset base largely consists of the
jetties, tank and pipes infrastructure and land at Marsden
Point, and the RAP. For tax purposes, depreciation is
expected to amount to circa $15 million per annum post
Conversion, reducing over time with diminishing value.
4.5 Private storage fees and investment
In addition to the shared ITS capacity, Customers are
seeking private tank storage arrangements at Marsden
Point. Customer negotiations are ongoing and current
estimates are that private storage requirements may
involve up to 100 million litres of additional tank storage
capacity. Detailed planning work for this additional capacity
is underway, with current cost estimates for 100 million
litres of additional storage capacity of approximately
$60 million and opportunity for incremental revenue of
up to $10 million per annum (in real terms).
Pricing will be set to provide Refining NZ with a fair
economic return over a commitment period in line with
the initial term of 10 years, having regard to the estimated
incremental cost to convert and refurbish existing tanks in
line with Customer requirements (notably capacity required
by product type) and periodic maintenance costs.

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
4.6 Conversion and decommissioning one-offs
One-off operating and capital costs of the Proposal are
currently estimated at $200 million to $220 million
23
and
which will be incurred in the period up to the Services
Effective Date and over a subsequent 5-6 year timeframe
from FID. This excludes any conversion of tanks for private
storage (referenced above), and refinery demolition costs
estimated at $50 million to $60 million with timing yet to
be determined. These cost estimates remain subject to
completion of ongoing FEED and detailed planning work
prior to FID. Figure 17 highlights the expected timing of
one-off costs of the transition pre and post commencement
of ITS services (i.e. the Services Effective Date).
Figure 17
• Pre-commencement costs primarily include spending
on capital projects required for ITS commencement,
preliminary design on projects to be delivered after
commencement and program management and
planning costs.
• Post-commencement costs (within 12 months of the
Services Effective Date and beyond) reflect the refinery
shutdown and decommissioning costs, continuation of
capital project design and construction (primarily tank
compound and firefighting systems upgrades) as well
as costs associated with employee expenses
(including redundancies).
• Expenditure beyond 12 months primarily relates to
continued tank bunding and firefighting system upgrades
and the completion of decommissioning activities.
Refinery demolition costs
The cost of demolition of the decommissioned refinery
assets (refer to Section 3.3) is estimated to be $50 million
to $60 million on a real basis, over and above the circa
$200 million to $220 million
23
costs outlined above, with the
timing yet to be determined.
Expected costs of the transition phased
100
90
80
70
60
50
40
30
20
10
0
12 months pre conversion 12 months post conversion Beyond 12 months
$M
23
On a real basis.

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60
4.7 Impairment and revaluation implications
Once a FID is made to approve and proceed with the
Proposal, the Company will be required to record a

non-cash impairment of the refining assets (part of property,
plant and equipment) that will not be used in the import
terminal operations and to revalue the remaining property,
plant and equipment that will be used in the import

terminal operations.
The carrying value of refining fixed assets (both those not
required and those required for import terminal operations)
as at 31 December 2020 was approximately $890 million.
The carrying value of these assets at the time of FID will be
subject to depreciation recognised and capital expenditure
capitalised in the current year, and a testing for impairment
of their carrying value as at 30 June 2021.
The remaining property, plant and equipment that will be
used in the import terminal operations (primarily the pipeline
from Marsden Point to Auckland, Marsden Point jetties and
fuel storage facilities had a carrying value of approximately
$200 million as at 31 December 2020.
In accordance with the accounting standards the refining
assets’ impairment will be recorded through the income
statement, while the revaluation of import terminal assets
will be recorded directly through other comprehensive
income. The overall net impact of the write-offs and
revaluations is likely to result in a change (increase or
decrease) in equity, which is not possible to estimate at
this time. Valuation work will be undertaken prior to FID to
support the revaluation of import terminal assets.
Offers were recently made to both medical retirees and
members of the defined benefit pension plan, to cash out
their benefits/entitlements for a cash lump sum, releasing
value from the balance sheet and increasing the Company’s
debt capacity. It is expected that the balance sheet liabilities
as at 31 December 2020 in relation to the medical scheme
and the defined benefit pension plan will reduce as a result
of acceptance of these offers.

4.8 Tax losses
As at 31 December 2020, Refining NZ had tax losses of
$54.9 million with an expectation that a similar quantum
of tax losses could be generated in the 2021 financial
year through to a Services Effective Date in mid-2022.
The write-off of refining assets on, or after the Services
Effective Date, is expected to generate tax losses of
$300 million to $350 million. This means that the
Company could have tax losses amounting to $400 million
to $450 million on or after the Services Effective Date.
These losses will be available to offset against
future taxable income of Refining NZ provided that
Refining NZ either:
i. satisfies the shareholder continuity test or, if the
shareholder continuity test is not satisfied,
ii. satisfies the business continuity test.
Under the shareholder continuity test, tax losses may be
carried forward provided that at least 49% of the shares
are held by the same group of people from the start of the
income year the losses arose to the end of the income year
when the tax losses are utilised. For the purpose of the
shareholder continuity test, shareholdings of less than 10%
are treated as being held by a notional single shareholder.
If the shareholder continuity test is not met, tax losses are
able to be carried forward provided that no major change
in the nature of the business activities occurs during the
business continuity period (being 5 years from when the
shareholder continuity test is not met) or, if there is a
major change, it is a permitted major change (summarised
in Table 3 below).

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Refining NZ The Explanatory Booklet and Independent Appraisal Report
The ability to satisfy the shareholder continuity test is beyond the control of Refining NZ. In a hypothetical scenario of a
breach in the shareholder continuity test, the business continuity rules would apply as follows:
PRE-CONVERSION BREACH OF SHAREHOLDER
CONTINUITY TEST
POST-CONVERSION BREACH OF SHAREHOLDER
CONTINUITY TEST
Pre-Conversion
Tax Losses
Tax loss carry forward is subject to the Business
Continuity Test and therefore dependent on
“there being no major” or a “permitted major
change” in the business.
A binding ruling may need to be sought from the
IRD to confirm whether the change in business
model from toll refining/distribution to import
terminal model would satisfy this requirement.
The Business Continuity Test applies from the time
of breach of the Shareholder Continuity Test and
will be satisfied provided that there is no further
major changes in the nature of the business
activities (i.e. as an import terminal) during the
business continuity period (being five years from
when a breach in shareholder continuity occurs).
Post-Conversion
Tax Losses
No impact - losses do not arise until conversion.The Business Continuity Test applies from the
time of the breach of the Shareholder Continuity
Test and will be satisfied provided that there is no
further major changes in the nature of the business
activities (i.e. as an import terminal) during the
business continuity period (being five years from
when a breach in shareholder continuity occurs).
Table 3
At this stage Refining NZ does not know whether it will be
able to fully utilise its losses as this depends on Refining
NZ being able to meet the shareholder continuity test or
business continuity test, and assuming these tests are met,
how long it will take to fully utilize the tax losses as this will
be a function of the amount of tax losses incurred though
to the Services Effective Date, the amount of the tax loss
that will arise on the write-down of the refining asset base
and the performance of the import terminal business in
future years.
Significant changes in the Company’s shareholding prior
to the Services Effective Date, resulting in a shareholder
change of more than 49%, would increase the risk of the
Company’s pre-conversion tax losses being forfeited.
4.9 Balance sheet and capital structure
If Refining NZ becomes an import terminal, the associated
one-off Conversion and decommissioning costs (identified
in Section 4.6) are expected to be funded by debt leading
to an overall increase in debt. Debt is currently expected to
peak in the 2 years following the commencement of import
terminal operations, but this could change as further work
is completed on FEED regarding the conversion plan and
timing and/or other economic factors drive changes in the
phasing and quantum of free cash flows.
Figure 18 highlights Refining NZ’s expected debt maturity
profile including the offers received from lenders for
which credit approval has been obtained, subject to
conclusion of satisfactory documents and satisfaction
of conditions precedent.

Refining NZ The Explanatory Booklet and Independent Appraisal Report

62
The Conversion financing process set out in Section 3.2 is
the first step in a longer-term process to establish financing
arrangements for the Company (as Channel Infrastructure)
that are appropriate for a fuels infrastructure business,
including diversification of funding sources and debt tenor.
In the longer-term, Channel Infrastructure will look to
maintain a shadow credit rating aligned with an investment
grade rated entity, with the Board targeting a Net Debt/
EBITDA ratio of 3 to 4 times, within 5 years after the
Services Effective Date.
The extension and increase in debt facilities, subject to
conclusion of satisfactory documentation and satisfaction
of conditions precedent, will provide the headroom for the
Company (as Refining NZ) to fund the one-off Conversion
and decommissioning costs identified in Section 4.6. The
Company (as Channel Infrastructure) would then commence
the refinancing of facilities commencing in 2022 via an
issuance on the debt capital markets, subject to market
conditions at the time.
The Board expects to be able to resume dividend payments
once the terminal is operational and debt levels are
below 4.5 times Net Debt/EBITDA. At this stage Refining
NZ estimates it will be able to recommence dividends
within 1 to 2 years following the terminal operations
commencement (i.e. the Services Effective Date). Channel
Infrastructure’s dividend policy is expected to target a
payout ratio between 60% and 70% of Free Cash Flows.
The Board reserves its right to adjust the payout ratio or
expected timing for the recommencement of dividends
should the timing, costs or revenue associated with
the Conversion (including new services such as Private
Storage Services) or the import terminal business change.
The dividend policy will be subject to the Board’s due
consideration of the Company’s medium-term asset
investment programme; a sustainable financial structure for
Channel Infrastructure, recognising the targeted investment
grade rating (within five years of the Services Effective
Date); and the risks from short and medium term economic
and market conditions and estimated financial performance.
Subordinated debt
Existing facilitiesConversion FundingFacilities refinancing
450
400
350
300
250
200
150
100
50
0
$M
Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25
Refining NZ Bank Maturity Profile
Figure 18
Note:
[1] that the first election date of the subordinated notes is 1 March 2024, with a maturity date of 1 March 2034, if not redeemed prior to that date;
[2] the conversion funding facilities (including the extension to 2023 of facilities expiring in 2021), have received lender credit approval, but are
subject to the conclusion of satisfactory documentation and satisfaction of conditions precedent.

63

Refining NZ The Explanatory Booklet and Independent Appraisal Report

VOTE IN FAVOUR
Refining NZ The Explanatory Booklet and Independent Appraisal Report

64
5. What if the
Proposal is not
implemented?

65

Refining NZ The Explanatory Booklet and Independent Appraisal Report
5.1 Overview of Simplified Refinery
If the Proposal is not implemented, Refining NZ
will continue to operate as a Simplified Refinery
and pipeline operator, under the Processing
Agreements that are currently in place.
These agreements may be terminated by
Customers at any time on 12 months’ notice.
Under the Simplified Refinery model, implemented from
January 2021, refining capacity was reduced by circa 18%
(being an equivalent of circa 34 million barrels per annum)
with total refined fuels production levels similar to levels at
the time of commencement of the Processing Agreements
in 1995 and bitumen production ceased. An organisational
restructure was finalised prior to 31 December 2020, at a
cost of circa $5.6 million to reduce the workforce by around
25%, with circa 90 employees leaving the Company either
through redundancies, retirements or resignations during
November 2020 through to April 2021.
However, in the face of a decarbonising world, Refining NZ
will not be able to continue refining operations indefinitely.
New Zealand’s petrol demand
24
is projected to fall below
Refining NZ’s production capacity as a Simplified Refinery
around 2035 and it is expected the refinery would be forced
to convert to an import terminal at some point in the future,
as the reduced petrol demand would be expected to make
refinery operations infeasible. New commercial terms
would need to be negotiated at that time with Customers
and there is no guarantee these terms would be the same
as the Proposal or that Refining NZ will have sufficient
capital at this time to fund the conversion.
5.2 Refinery business model
The refinery would continue to operate under the
existing Processing Agreements, retaining the
Company’s exposure to volatility in gross refining
margin (GRM), foreign exchange (US$:NZ$)
rate movements and operational performance
(including turnarounds). The business would also
retain significantly higher capital and operating
costs (versus the ITS) and be increasingly
exposed to the ETS (see below) as well as energy
costs in New Zealand. See Section 6 under the
“Customer Disputes and Simplified Refinery
Model” and “Refining Margin and Exchange
Rate” risks.
Under the Processing Agreements, Refining NZ operates
as a tolling refiner, charging its Customers a Processing
Fee for its services while ownership of the feedstocks
and the products are retained by its Customers. As part
of the Processing Agreements, Refining NZ also receives
an income from distributing fuel via the Refinery-to-
Auckland pipeline (RAP) to the Wiri Terminal in Auckland.
The Processing Agreements are exclusive, evergreen
contracts meaning that Refining NZ is restricted in its
ability to sell its services to other customers unless there
is structural under-utilised refining capacity. Refining NZ
also does not have an express entitlement to terminate
the Processing Agreements on a specific period of notice
without the consent of its Customers. Customers have
the right to terminate the Processing Agreements on
12 months’ notice.
The Processing Agreements contain Margin Cap and
Fee Floor provisions. The Fee Floor clause guarantees a
minimum Processing Fee income for Refining NZ for each
calendar year which is subject to escalation, whilst the
Margin Cap limits Refining NZ’s Processing Fee when the
average GRM for the year reaches US$9 per barrel (which
is not escalated).
As a result, while the Processing Agreements remain
in place Refining NZ will continue to be protected by
downside revenue risk through the Fee Floor, regardless
of GRM, foreign exchange and throughput. It remains
exposed to escalation of operating costs, insofar as
these differ to the formulaic escalation of the Fee
Floor, and hence its ability to maintain cash-neutral
operations may diminish with time (refer to Section 6
under the “Customer Disputes and Simplified Refinery
Model” risk for further details). The Fee Floor for 2021 is
approximately $141 million.
Refining NZ’s gearing as at 31 December 2020 was 33%,
compared to a target of 20%. The maturity profile of debt
facilities as at 31 May 2021 is set out in Figure 19, which
shows that Refining NZ has circa $210 million of bank
24
Based on Hale & Twomey’s base case NZ transport fuels demand projections – refer to Section 2.3

Refining NZ The Explanatory Booklet and Independent Appraisal Report

66
facilities maturing within the next three years. (i.e. before
30 June 2024). In addition, the first election date for the
subordinated notes is 1 March 2024. If the Company
was to continue to operate as a Simplified Refinery and
if GRM does not improve, not only would Refining NZ’s
cost of debt likely be higher given its weaker credit profile,
but lenders may seek a reduction in debt at the next
refinancing or will not continue to offer the current level
of funding support (also considering ESG matters, see
“Climate Change” in Section 6). This is because Refining
NZ’s ability to repay debt would be limited and, in these
circumstances, the current shareholders may be called
upon to contribute equity to the Company.
5.3 New Zealand’s demand for transport fuels
The outlook for fuel demand in New Zealand has
changed significantly over recent years and this
has implications for refining operations. Successive
Governments have been targeting net zero
emissions by 2050 and the current Government
is considering various incentives and regulatory
interventions to achieve this. More recently, the
COVID-19 pandemic created a sharp drop in fuel
demand as travel restrictions were implemented
and the expected near-term recovery in fuel
demand remains relatively uncertain.
A chart in Section 2.3 shows the volume forecasts
that underpin Refining NZ’s current view on future fuel
demand in New Zealand, based on forecasts provided by
independent industry experts Hale & Twomey. The chart
highlights a recovery and expected growth in jet fuel
demand while petrol and diesel demand is expected to
plateau and decline as a result of improved fuel efficiency
of the transport fleet, and the growing use of alternative
sources of propulsion (e.g. electricity, low-carbon fuels,
hydrogen), and other factors (refer to Section 2.3).
140
120
100
80
60
40
20
0
2021 2022 2023 2024 2025 2034
Senior debt
Sub debt
$M
Refining NZ Debt Maturity Profile as at 31 May 2021
Figure 19
[1] Note that the first election date of the subordinated notes is 1 March 2024, with a maturity date of 1 March 2034, if not redeemed prior to that date
[2] Note that facilities expiring in 2021 have received lender credit approval for extension to 2023, but are subject to the conclusion of satisfactory
documentation and satisfaction of conditions precedent.