Dear all,

The below are answers given by Hengyuan during AGM on my questions. The answers given did not give clearity to the truth I seek. Will write another private email to CEO, independend directors and external auditor for further investigation and if possible seeking a private meeting.

Wishing all a Happy Holiday and to our Muslim Brother and Sister “Selamat Hari Raya Aidilfitri, Maaf Zahir dan Batin”

Thank you.

Question 1:

Please mark/indicate crude oil agreed purchase price and date of purchase against the background Brent Oil Price (Jan-Dec 2018) show in Annual Report 2018 page 34: Performance review 2018.

Answer 1:

HRC’s crude purchases are against various published benchmark prices in the Mean of Platts Singapore (MOPS), depending on the locality and quality of the crude. The requested purchase prices are commercially sensitive information.

Question 2:

Please explain how many of your crude oil agreed purchase prices are at premium or discount to the Brent Oil price benchmark and reasons for premium/discount?

Answer 2:

Crude cargoes purchased by HRC are priced against the relevant market benchmark and negotiated premium/discounts based on market indications.

The premium/discount will depend on the scarcity and quality of the crude and market conditions at the time. The premium/discount changes from time to time depending as well on supply and market demand.

Question 3:

Refer unaudited quarterly report. Please give the purchases volume and average Brent oil purchased price for each quarter?

Answer 3:

We have provided our production volume which closely matches our purchase volume. We are unable to provide the average purchase price for each quarter due to this information being commercially sensitive. We have however provided the Brent Oil price average for the quarters.

Question 4:

If benchmark against Petron M quarterly Average Brent oil purchased price period Q1:Q2: Q3: Q4 of USD/barrel 67: 74: 75: 67. How Hengyuan quarterly Brent Oil average purchased performance: Underperform/over-perform and reasons why?

Answer 4:

Petron has provided the average published Brent oil price for the period. These should be consistent with what is quoted in the market.

Petron and HRC each purchases different crudes to optimize their respective refineries. We do not have access to Petron’s crude slate of purchase prices as this is commercially sensitive information.

Question 5:

What is the necessary for an EPCC contractor when you can purchase H2 plant from many well established H2 plant suppliers?

Answer 5:

Our hydrogen plant is being purchased from one of the many well established H2 plant suppliers. In this case they are providing the license for the process and also the design and construction of the plant under an EPCC model.

We need an EPCC contractor to supervise the site construction and to ensure the tie-ins to the existing plant are designed properly and safely.

Question 6:

Please give project cost break down for this H2GEN EPCC contract and explain why total cost is USD66.4 million when BIG in Thailand only need an investment of USD 16 million for a slightly bigger capacity H2 plant?

Answer 6:

Our H2GEN EPCC was selected using a competitive tender involving the major hydrogen suppliers from around the world. We are unable to publish the cost breakdown as it is commercially sensitive.

We have limited information on the BIG project. However we understand their scope is hydrogen purification rather than manufacturing hydrogen from natural gas. That is a simpler scope so is very much less expensive.

We considered the purification approach but our refinery hydrogen rich stream volumes are not sufficient to supply our future needs.

Question 7:

Please confirm by Q1 2020 Hengyuan able to produce Euro 4M & Euro 5M Mogas and by Sept 2020 Euro 5 gasoil with no significant addition CAPEX for this Euro5 gasoil.

Answer 7:

Our plant will be capable of producing both Euro 4, and Euro 5 specification Mogas with no additional CAPEX. After commissioning we will produce Euro 4 in line with the gazetted specifications.

The Euro 5 Gasoil project will produce Euro 5 from commissioning. No additional CAPEX is anticipated.

Question 8:

Please explain why an upgrade from Euro 4M to Euro 5M Mogas will cost another addition USD 76 million a 56.3% of total Euro 4M investment?

Answer 8:

The cost difference you refer to was addressed in the announcement dated 02 November 2018.

“The additional capital expenditure will be used to expedite long lead and additional equipment for a larger scope of activities and to upgrade the Project to deliver refining capability for the production of both Euro4M and future Euro5M mogas specifications when required”.

The upgrade from Euro4M to Euro5M is only a portion of the cost – with the balance covering the long lead items and additional equipment.

We also optimized the investment schedule reflecting the date of the government timeline for Euro 5M implementation and our future turnaround plans.

Question 9:

Why invest now when Euro 5M mogas specification change is mandated,            which is expected to be from 2025 onwards?

Answer 9:

It is much more cost effective to design and build the plant at one time before the new specifications become active. Taking the plant off-line for future modifications would require HRC to import product which would be extremely costly.

Question 10:

Did Hengyuan claim any compensation for late delivery on Euro 4M project?

Answer 10:

The project is not yet commissioned. If the project is delayed, we will claim from the EPCC contractor per the terms of the contract.

Question 11:

Is Hengyuan current refinery’s emissions comply with the Clean Air Regulation (“CAR”) 2014? If complied then why need CAPEX of USD 48 million for CAR project?

Answer 11:

2014 refers to the date when the regulations became law. The new emission specifications only apply from 2019. The CAPEX is necessary to comply with the new tighter specifications.