Company Announcements

1. INTRODUCTION

The Board of Directors of Hengyuan Refining Company Berhad (HRC), formerly known as Shell Refining Company (Federation of Malaya) Berhad, is pleased to announce that it has approved the investment for a Euro 4M mogas plant within its refining complex in Port Dickson.

The Euro 4M plant is an integrated complex, which has been designed to desulphurise the full range Cat Cracked Gasoline (CCG) produced by our Long Residue Catalytic Cracking Unit (LRCCU). The design uses a combination of hydro-processing and liquid-liquid extraction technology, commercially proven and licensed by reputable technology licensors. The technology is also being used successfully by Shandong Hengyuan Petrochemical Company Limited in its Shandong based refinery and chemical complex which produces Euro 6 grade mogas.

The plant will have a capacity of 1.15 million tonnes per annum. This investment ensures HRC is well placed to meet the Euro 4M mogas specifications mandated by the Malaysian regulatory authorities by 1 October 2018. The Euro 4M plant can be further upgraded to produce Euro 5M mogas when the specification change is  mandated, which is expected to be from 2025 onwards. As such, this investment underpins HRC’s commitment to deliver high quality products to its customers and to long term sustainable refining in Malaysia.

2. THE TOTAL INVESTMENT COST

The Total Investment Cost for the project is USD135 million +/- 10%.

3. DURATION OF THE PROJECT

The project is expected to come on-stream by the 2nd half of 2018.

4. FINANCIAL EFFECTS

The project is planned to be financed mainly from a mix of cash flow generated from operations and a  further draw down from an existing term loan.

5. DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTEREST

None of the directors or substantial shareholders of HRC or persons connected with them have any interest, whether direct or indirect, in the investment decision.

6. STATEMENT BY DIRECTORS

HRC’s Board of Directors is of the opinion that the above investment decision is in the ordinary course of business and is in the best interest of the company.

7. APPROVALS REQUIRED

This investment decision is not subject to the approval of shareholders of HRC or any relevant authorities.

This announcement is dated 16 June 2017.