Channel Infrastructure - Q1 Conversion Project Update

Wednesday 13th April 2022

Channel Infrastructure (CHI), New Zealand’s largest fuel import terminal business based at Marsden Point in Northland, has today released its inaugural quarterly conversion project update for the three months ended 31 March 2022 (Q1 FY22).

Channel Infrastructure commenced operations as a dedicated fuels import terminal business on 1 April 2022. Over the next 12 months work will be undertaken to decommission the refinery, transition the workforce and commission the contracted private storage, and these quarterly updates will provide an update on progress.

Key conversion project highlights for Q1 FY22 include:

• Completed refinery shutdown safety and to plan, despite challenges of COVID in the community

• Successfully commenced import terminal operations on 1 April 2022

• Intensive on-going programme of transition support for our workforce

• Conversion costs tracking to plan, with $20 million spent to 31 March 2022

CEO Naomi James said “Following the safe shutdown of the refinery and completion of a number of conversion projects, we have successfully commenced operation of New Zealand’s largest fuel import terminal at Marsden Point. Our conversion project and private storage projects remain on-plan and to budget.”

Refining NZ completed the shutdown of its refinery in late March safely and to plan, despite the challenges of operating with COVID in the community. The shutdown was completed with continued excellent safety performance with no Tier 1 or Tier 2 process safety incidents and one recordable personal safety incident (our first lost time injury in over two years). Following the successful completion of a number of conversion projects, including fuel additive dosing facilities and linework modifications for imports, Channel Infrastructure began operations as a dedicated fuels import terminal on 1 April 2022. The long-term Terminal Services Agreements with customers bp, Mobil and Z Energy also commenced on 1 April 2022. Channel Infrastructure has successfully received fuel from three vessels since that time.

Following the shutdown of the refinery, two months of intensive site works to decommission refinery assets which include steaming and chemical decontamination of the refining plant, catalyst removal, and flushing and draining of plant and linework has now commenced. These 24/7 decommissioning activities are expected to complete around the end of May, with decommissioning activities continuing as day-works following that time. Private storage tanks not requiring conversion work are already in operation, while a range of works are planned or underway to bring other private storage tanks into operation with commissioning scheduled through 2022 and H1 2023.

The refinery workforce transition will occur progressively over the coming year, as transition and decommissioning work is completed. Focused on supporting people through this major transition, Channel Infrastructure has committed to and set a target, as outlined in our Sustainability Report released last week, to have at least 90% of employees who are seeking new employment find new roles or be retraining within six months. An intensive programme of transition support is now well underway with personal transition plans, career counselling, access to training and development and support to find new jobs.

Conversion costs are tracking to plan ($200-220 million of conversion costs and $45-50 million for private storage over 5-6 years), with $20 million spent to 31 March 2022. Net Borrowings reduced $11 million from year-end to $173 million as at 31 March 2022 reflecting the sale of carbon units, above fee floor processing income and lower refinery maintenance spend.

- ENDS -

CHI Q1 Conversion Project Update

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