The spread between Petroleum products and Dubai • Naphtha Spread - Higher: Naphtha - Dubai spread in 2021 was USD 1.4 per barrel increasing by 178% from USD -1.8 per barrel in 2020. This was because the price of LPG, a raw material for olefins production, was high, hence increasing Naphtha demand for substituting LPG utilization in such production. In addition, higher Gasoline spread led to increasing Naphtha demand for producing Gasoline. In 4Q21, Naphtha - Dubai spread was USD 3.6 per barrel increasing by 71% from USD 2.1 per barrel in 3Q21. This was owing to high Gasoline and LPG prices boosting Naphtha demand for substituting the use of such products. • ULG95 Spread - Higher: ULG95 - Dubai spread in 2021 was USD 11.1 per barrel increasing by 152% from USD 4.4 per barrel in 2020 thanks to eases of COVID-19-related restrictions, especially in European countries and the U.S., which entailed rising Gasoline demand. In the meantime, the Gasoline demand in Asia at the end of 2021 reached the pre-pandemic level. In 4Q21, ULG95 - Dubai spread was USD 15.5 per barrel enhancing by 31% from USD 11.8 per barrel in 3Q21 as the demand improved regularly, especially in the U.S., owing to better overall COVID-19 pandemic situations. • Gas Oil Spread - Higher: Gas Oil - Dubai spread in 2021 was USD 6.7 per barrel increasing by 10% from USD 6.1 per barrel in 2020 due to the rising price of LNG, being a raw material for power generation, hence escalating Diesel demand for substituting LNG utilization or socalled Gas-to-oil switching. In 4Q21, Gas Oil-Dubai spread was USD 11.4 per barrel improving by 111% from USD 5.4 per barrel in 3Q21. This was because Diesel demand enhanced seasonally over a quarter, particularly in Asia that the Diesel demand recovered following the lockdown eases, while a Diesel export from China declined due to refinery maintenance shutdowns. • Fuel Oil Spread - Lower: High Sulphur Fuel Oil (HSFO) - Dubai spread in 2021 was USD -4.9 per barrel declining by 63% from USD -3.0 per barrel in 2020 owing to weak HSFO demand following congestions at certain major ports and decreasing crude oil exports from the U.S. and countries in the Middle East. In addition, HSFO production increased according to improving refinery utilization, which pressured the HSFO price. In 4Q21, HSFO - Dubai spread was USD -6.9 per barrel dropping by 103% from USD -3.4 per barrel in 3Q21 as the HSFO demand was weak following the port congestions, while the Gross Refining Margin revived encompassing growing overall refinery utilization resulting in the rising HSFO production. The spread between Lube Base Oil products and FO 180 3.5%S • 500 SN Spread - Higher: Lube Base 500SN - Fuel Oil spread in 2021 was USD 845 per ton increasing by 117% from USD 389 per ton in 2020 owing to the declining supply according to maintenance shutdowns of several Lube Base Oil plants, whilst the Lube Base Oil demand was steady. In 4Q21, 500SN - Fuel Oil spread was USD 671 per ton dropping by 25% from USD 895 per ton in 3Q21 as the supply recovered after the heavy shutdown period of the refinery plants was over. Meanwhile, the demand was pressured as certain factories in China adjusted their operating rates down because of insufficient power issues in China. • Asphalt Spread - Lower: Asphalt - Fuel Oil spread in 2021 was USD -11 per ton declining by 129% from USD 38 per ton in 2020 as the Asphalt demand decreased owing to budget allocation focusing more on boosting economies and healthcare systems, thus lower budget for infrastructure improvement. Moreover, the Asphalt demand in China was curbed by Zero COVID policies leading to lockdowns in certain areas of China. In 4Q21, Asphalt - Fuel Oil spread was USD -29 per ton increasing by 33% from USD -43 per ton in 3Q21 as the demand in 3Q21 was constrained amid rainy season. 167 Management Discussion and Analysis (MD&A) IRPC PUBLIC COMPANY LIMITED
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