Operational Update for July/August 2021

21 September 2021 NZX Announcement
Operational Update for July/August 2021









COMMENTARY
Refining NZ’s excellent personal health and safety performance continued with no recordable injuries.
RAP throughputs at 2.4 Mbbls were higher than the same period last year but c.29% lower compared to the
same period in 2019, due to the lower jet fuel demand at Auckland International Airport and lower petrol
and diesel demand following the Level 4 lockdown which commenced on 17 August. Jet fuel volumes fell to
c.36% of pre-COVID levels in July/August, down from c.40% in May/June, following the closure of the
Australia/New Zealand bubble. Since the commencement of Level 4 lockdown, petrol and diesel RAP volumes
have averaged c.30% and c.50% of pre-COVID levels, respectively.
The July/August GRM was US$2.96/bbl, generating processing fee revenue of NZ$16.7 million, prior to Fee
Floor subsidy payments of NZ$7.1 million. Singapore Dubai complex margins for the July/August period
averaged negative US$2.54/bbl, impacted by on-going COVID-19 demand destruction. Refining NZ’s GRM
uplift over the Singapore margin was US$5.49/bbl driven primarily by lower prices for crudes processed
relative to Dubai crude and the low fuel-oil make.
August’s net debt closed at NZ$230 million reflecting cash neutral operations at the Fee Floor. The Company
remains on track to deliver cash neutral
1
operations across the full year.
Refining NZ has now reached in-principle agreement with Mobil, the third and final customer, on key
commercial terms for a potential import terminal operation at Marsden Point. The Company has also
secured shareholder and lender consents and is close to completing the detailed planning to be ready for a
final investment decision by the Refining NZ Board. Finalisation of Terminal Services Agreements with

1
Cash neutral excludes Strategic Review restructuring and implementation costs.
HIGHLIGHTS
• Excellent personal health and safety performance continued with no recordable injuries.
• RAP volumes were lower than May/June, due to the Level 4 lockdown in August and the closure of the
Australia/New Zealand travel bubble.
• Processing Fee revenue was NZ$23.9 million, including Fee Floor payments of NZ$7.1 million.
• August’s net debt closed at NZ$230 million, reflecting the simplified refinery’s cash neutral operations at
the Fee Floor.
• In-principle agreement reached with all three customers, with shareholder and lenders consent to the
import terminal conversion secured.
• Refining NZ is working to finalise Terminal Services Agreements with customers in October which would
enable a conversion to occur in the first half of 2022.
•

Page 2 of 6
customers is now the key remaining step ahead of a final investment decision. Refining NZ is working to
finalise agreements with customers in October, which would enable conversion to occur in the first half of
2022.

Authorised by:
Chris Bougen
General Counsel and Company Secretary

For further information:
Laura Malcolm
Communications Advisor
communications@refiningnz.com
+64 (0)21 0236 3297

Page 3 of 6
OPERATIONAL DATA





Appendix I 2021
Jul/Aug
Jul/Aug
FY
FY
2021
2020
2021
2020
Health, Safety & Environment
LTI
#
0
0
0
0
LTIF
#/200,000hrs
-
-
-


-


TRC
#
0
0
0
0
TRCF
#/200,000hrs
-
-
-


-


Tier I Process Safety Events
#
0
0
2
0
Tier II Process Safety Events
#
0
0
0
0
Releases outside of consent
#
0
2
9
5
Refining
Brent Crude Oil Price
US$/bbl
72.9
44.1
66.9
41.7
Exchange Rate
US$/NZ$
0.70
0.66
0.71
0.65
Operational availability
%
100.0
99.6
94.2
98.2
Unplanned process downtime
%
0.0
81.2
0.0
23.2
Refining throughput
Mbbl
5.64
1.77
18.70
29.88
Gross Refining Margin
US$/bbl
2.96
-4.18
3.12
1.63
Gross Refining Margin
US$M
23.8
22.3
95.1
131.6
(including Fee Floor/Margin Cap)
Processing Fee (including Fee Floor/Margin Cap)
US$M
16.7
15.6
66.6
92.1
Processing fee (including Fee Floor/Margin Cap)
NZ$M
23.9
23.7
93.5
141.6
Distribution
RAP throughput
Mbbl
2.4
2.1
9.5
14.7
Note s :
1) The i nforma ti on provi de d i n thi s a nnounce me nt e xcl ude s Re ve nue from othe r a cti vi ti e s .
2) The Proce s s i ng Fe e re s ul ts re porte d i n thi s a nnounce me nt a re s ubje ct to cha nge due to pos t a nnounce me nt pri ce
upda tes a nd i ndependent a udi t.
3) A fi ve -ye a r hi s tory of Throughput, Ma rgi ns a nd Proce s s i ng Fe e s i s a tta che d be l ow.
4) Re fe r to the e xpl a na tory note s /gl os s a ry for a de fi ni ti on of te rms .

Page 4 of 6
HISTORICAL INFORMATION - REFINING



Appendix II 2021
20172018201920202021
Ja n/Fe bBa rre l s 000's7,1607,0116,9636,9094,429
RNZ USD GRM pe r ba rre l
1)
6.587.544.881.043.48
Si nga pore Duba i Compl e x GRM3.423.37-0.32-1.58-1.56
Upl i ft vs . Si nga pore Duba i Compl e x
3)
3.164.175.202.625.04
NZD Proce s s i ng Fe e (mi l l i on)
2)
45.950.834.923.022.6
Ma r/AprBa rre l s 000's5,1406,9587,3124,6563,451
RNZ USD GRM pe r ba rre l
1)
9.356.826.630.671.50
Si nga pore Duba i Compl e x GRM3.023.750.750.19-1.99
Upl i ft vs . Si nga pore Duba i Compl e x
3)
6.333.075.880.483.50
NZD Proce s s i ng Fe e (mi l l i on)
2)
48.145.850.123.723.5
Ma y/JunBa rre l s 000's7,7553,9106,9453,8675,171
RNZ USD GRM pe r ba rre l
1)
7.630.184.364.594.07
Si nga pore Duba i Compl e x GRM2.902.020.17-3.78-2.62
Upl i ft vs . Si nga pore Duba i Compl e x
3)
4.73-1.844.198.376.68
NZD Proce s s i ng Fe e (mi l l i on)
2)
58.40.732.223.323.5
Jul /AugBa rre l s 000's7,5117,6157,4191,7665,644
RNZ USD GRM pe r ba rre l
1)
8.876.867.10-4.182.96
Si nga pore Duba i Compl e x GRM4.702.573.23-2.46-2.54
Upl i ft vs . Si nga pore Duba i Compl e x
3)
4.174.293.87-1.735.49
NZD Proce s s i ng Fe e (mi l l i on)
2)
63.654.356.223.723.9
Se pt/OctBa rre l s 000's6,8167,6397,2456,219
RNZ USD GRM pe r ba rre l
1)
9.317.096.161.15
Si nga pore Duba i Compl e x GRM4.732.473.55-1.64
Upl i ft vs . Si nga pore Duba i Compl e x
3)
4.584.622.612.79
NZD Proce s s i ng Fe e (mi l l i on)
2)
62.257.849.323.3
Nov/De cBa rre l s 000's7,3427,3076,8036,459
RNZ USD GRM pe r ba rre l
1)
6.836.532.623.24
Si nga pore Duba i Compl e x GRM3.671.80-1.55-1.54
Upl i ft vs . Si nga pore Duba i Compl e x
3)
3.164.734.164.78
NZD Proce s s i ng Fe e (mi l l i on)
2)
50.749.219.224.6
TotalBarrels 000's41,72440,44042,68729,87618,696
USD GRM per barrel
1)
8.026.315.341.633.12
NZD Processing Fee (million)
2)
328.9258.7242.0141.693.5
1) Excl ude s Fe e Fl oor/Ca p a djus tme nt
2) I ncl ude s Fe e Fl oor/Ca p a djus tme nt
3) RNZ upl i ft vs . Si nga pore Duba i Compl e x GRM i s i n USD pe r ba rre l

Page 5 of 6
EXPLANATORY NOTES/GLOSSARY
Gross Refining Margin (excluding Fee Floor/Margin Cap)
The Gross Refining Margin is calculated in USD as the difference between the value of products and
the cost of feedstock for each refining customer. The value of products use Singapore quoted prices
adjusted for New Zealand quality and the cost of importing those products to New Zealand.
Feedstocks are valued using the notional market values adjusted for the cost of getting the feedstock
to the refinery. The Gross Refining Margin incorporates the cost of hydrocarbon used as fuel and
incurred as process losses.
Typically, Refining NZ has an uplift over the Singapore complex margins of around USD 3.00 to 4.00
per barrel. The value of the uplift varies due to fluctuations in freight rates, product quality
premium, crude market premium and operational performance. Product quality premium are the
cost differentials between products made to New Zealand quality and products made to the quality
that applies to quoted prices in Singapore. Crude market premium are the cost differences between
the crude types actually processed at Refining NZ and Dubai (used as basis for the Singapore
complex margins). Refining NZ’s crude diet comprises of crudes that price off Dubai as well as crudes
that price off different markers such as Brent. The fluctuations of these price markers relative to
each other impact the uplift.
Margin Cap/Fee Floor Adjustment
The processing agreements with our customers contain both Floor and Margin Cap clauses, both
effective over a full calendar year.
The Fee Floor is the minimum Processing Fee due, for a calendar year, up to a current maximum of
NZD140.5 million. If the year-to-date Processing Fee is below the pro-rata Fee Floor, then an interim
pro-rata Fee Floor payment is made by the Customers. Should the Processing Fee exceed the Fee
Floor in future months any pro-rata Fee Floor payments that have been made are repaid to the
Customers.
The Margin Cap limits the Gross Refining Margin for each customer to a maximum of USD9.00 per
barrel over the calendar year. Should the Gross Refining Margin fall below the Cap in future months
any pro-rata Cap reductions that have been made are repaid by the Customers.
The Cap and the Floor are subject to year-to-date adjustments.
Any balance remaining at the end of the year cannot be carried over to the next year.
Processing Fee (after Fee Floor/Margin Cap)
The Processing Fee is 70% of the Gross Refining Margin after any adjustment for the Margin Cap or
Fee Floor. The Processing Fee is paid by our customers in NZD.
RAP throughput
RAP throughput is the volume of refined products, comprising gasoline, jet fuel, and diesel that are
delivered via the Refinery to Auckland Pipeline (RAP) to the Wiri oil terminal.
Refining throughput
Refining throughput is the volume of feedstock intake, comprising crude oil, residues, natural gas
and blendstock, measured in barrels. One barrel equates to approximately 159 litres.
Turnaround
A scheduled outage of one or more process units, planned well in advance and typically occurring in
cycles of 2 years or more, for the purpose of significant mechanical inspection and repair

Page 6 of 6

EXPLANATORY NOTES/GLOSSARY (continued)
LTI (Lost time injuries) and LTIF (Lost time injury frequency)
Lost time injuries refer to fatalities, permanent disabilities or time lost from work.
Lost time injury frequency refers to the number of lost time injuries over a rolling 12-month period,
per 200,000 hours worked.
TRC (Total recordable cases) and TRCF (Total recordable case frequency)
Total recordable cases refer to lost time injuries, medical treatment, and restricted work cases.
Total recordable case frequency refers to the number of recordable injuries over a rolling 12-month
period, per 200,000 hours worked.
Tier 1 Process Safety Event (API 754)
A tier 1 Process Safety Event (PSE) is an unplanned or uncontrolled release of any material, including
non-toxic and non-flammable, from a process which results in one or more of the following: A LTI
and/or fatality; a fire or explosion resulting in greater than or equal to $100,000 of direct cost to the
company; a release of material greater than the threshold quantities given in Table 1 of API 754 in
any one-hour period; an officially declared community evacuation or community shelter-in-place.
Tier 2 Process Safety Event (API 754)
A tier 2 Process Safety Event (PSE) is an unplanned or uncontrolled release of any material, including
non-toxic and non-flammable, from a process which results in one or more of the following: A
recordable injury; a fire or explosion resulting in greater than or equal to $2,500 of direct cost to the
company; a release of material greater than the threshold quantities given in Table 2 of API 754 in
any one-hour period.
Operational availability
Operational availability is the percent of time available for manufacturing after subtracting
maintenance and regulatory/process downtimes.
Unplanned process downtime
A unit downtime is “planned” if the refinery is aware of and has scheduled that unit outage in the
previous year. Unplanned process downtime is the weighted average of unplanned downtime
across all process units.