WHAT IS THE DIFFERENCE BETWEEN SYNTHETICS (PAO & GRP III) AND MINERAL OILS?

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1 MARCH NEWS Please note that customers that have supplied us with addresses will receive news / specials as soon as they are processed. Customers that require this document to be posted can expect to receive it 4-7 days after release. TECHNICAL FACTS WHAT IS THE DIFFERENCE BETWEEN SYNTHETICS (PAO & GRP III) AND MINERAL OILS? There are many types of synthetic oils on the market today. They are manufactured from different feedstocks and many are application specific. Below we look at the more common synthetics used in industrial lubricants and engine oils. GROUP III SYNTHETIC BASE OIL (GRP III) since 1999, GRP III base oils have been classified synthetic base oils. Prior to 1999 they were considered mineral oils as they are still refined from crude oil. After a lawsuit was lodged in the USA for false advertising (for calling GRP III synthetics), the courts ruled due to the refining process and finished oil properties, GRP III s are in fact synthetics. During the refining process, GRP III s are so highly refined (in the presence of hydrogen) they almost match the properties of Group IV synthetics (such as PAO s). There are other benefits of formulating lubricants with GRP III s over PAO s such as lower cost, greater availability & improved solubility. When comparing viscosity index, low temperature performance, volatility & oxidation stability PAO s and GRP III s are chemically very similar. POLY ALPHA OLEFINS (PAO S) PAO s were common synthetic base oils used in many lubricants including engine oils before Group III base oils became mainstream. PAO s are synthesised from ethylene. They have many benefits over mineral oils and Group III s including low pour points, high viscosity index, low volatility, excellent thermal stability and excellent natural lubricity. When formulated in industrial oils and driveline fluids, PAO s increase service intervals, through increased lubricity they contribute to lower wear & operating temperatures. Currently there is a global shortage of PAO s and this has contributed to very high pricing & limited supply.

2 DIFFERENCE IN PERFORMANCE: Synthetics lubricant molecules are much more structured and consistent due to the refining process. This allows the end molecule to be much more predictable. The above image shows when a synthetic oil is placed between two moving surfaces, the molecules align to provide more structured boundary lubrication when compared to a mineral oil. NEW PRODUCTS / SPECIFICATION CHANGES Attached are the PDS s for the new products listed below. Many new vehicles are now calling for 0w30 engine oils to meet fuel economy standards. Due to the increased demand we have released two new synthetic low viscosity engine oils. Currently only available in 205lt / 20lt drums and soon to be released in 5lt packs. NAME GRADE 20LT PART# 205LT PART# Syn-Star 0w30 Synthetic API SN / ACEA C Syn-Star LV 0w20 Synthetic API SN / GF REFRIGERATION OILS Gulf Western has released two new refrigeration oils. They are suitable for use in refrigeration compressors. Such compressors are fitted to refrigeration trucks transporting chilled goods such as food. NAME GRADE 20LT PART# 205LT PART# Artic-X Refrigeration Oil ISO Artic-X Refrigeration Oil ISO

3 TRANSMISSION FLUID Transyn-MF is a synthetic blend multifunctional Automatic Transmission Fluid. It meets ATF +, Dexron VI, III, IIIE and Ford 95LE. It has been developed to offer customers a more cost effective ATF when SYN-TS is deemed too expensive. The differences? SYN-TS is a fully synthetic multifunctional ATF that is suitable to nearly all modern and older ATF s excluding DSG and CVT transmissions. Transyn-MF covers most of the specs of SYN-TS however not all of them, most notable is that it is not suitable for ZF 6 Speed automatics. Transyn-MF is offered at a lower price point than SYN-TS to compete with other mid-tier ATF s. NAME GRADE 20LT PART# 60LT PART# 205LT PART# TRANSYN-MF 10w ATF NEW PACK SIZES Truck and Farm Grease Lithium Complex now available in 55kg - part # Low Vis & Gear Oil 75w85 now available in 60lt - part # Outboard TCW-3 now available in 4lt - part # (5lt no longer available) Tyre Shine now available in 400gram aerosol can - part # For a complete list of all our products, please contact your Sales Rep for an up to date price list. OIL PRICES / CRUDE OIL Crude oil prices are at their lowest level for some years and many of our customers have been asking if our prices are coming down. Below is a brief explanation of how crude oil has been impacting base oil prices. Firstly, keep in mind in the last 7 years Gulf Western has had two general price decreases for all our customers, both large and small. Our last decrease was in February Generally speaking, it has been unprecedented for oil companies to drop prices across the board for lubricants however our business is committed to offering fair and transparent pricing. After our decrease in February 2015, base oil prices increased steadily throughout the year. This was contributed mainly to the Australian dollar falling in value against

4 the USD (all our base oil is purchased in USD s). Singapore base oil parity also increased throughout 2015, peaking in October. While base oils prices are beginning to soften, they are not falling as fast as crude oil. In fact prices are just beginning to align with where they were at the start of Crude oil and base oil pricing are two very different commodities. While many things impact crude oil, base oil is mainly driven by supply / demand & the strength of the AUD / USD (for Australia). The current supply / demand balance in Asia has yet to reach a point that will allow us to review prices as most decreases have been offset by a weakening Australian dollar. The weaker Australian dollar has also seen price increases from all our additive suppliers, as additives are also purchased in USD. NEW STAFF MEMBERS Gulf Western is pleased to announce the appointment of Mr. Robert Belic as our Group Operations Manager. Robert has 26 years experience in the oil industry and brings a wealth of knowledge to our business. This month we also welcome Kim Stephenson to our Sales Team. Kim joins our team of Sales Reps in Victoria. GULF WESTERN AND INDEPENDENT OILS RACEWAY (NAMING RIGHTS SPONSORSHIP OF THE LATROBE AND HOBART SPEEDWAYS) Late last year, we announced the naming rights sponsorship of the Latrobe and Hobart Speedways in Tasmania. This is a joint venture with our Tasmanian distributor Independent Oils. We are very excited about this sponsorship and have already been enjoying some weekend racing events. For details on the speedways, racing calendars or news - please visit Continue on for some photos from the raceway -

5 Some of the Gulf Western and Independent Oils signage at the raceway. Remember our OEM approvals, we now have MTU - we have formal OEM approval on various heavy duty diesel engine oils from the engine manufacturers listed below and we can supply these approvals on request. Regards, THE GULF WESTERN TEAM Australia s Largest Aussie Owned Oil Company AUSTRALIAN OWNED AND MADE Gulf Western Premium Quality Lubricating Oils (Australia) Pty Ltd 92 Links Rd, St Marys, NSW 2760 Phone Number: or Fax Number: Davis Distributing 1/11 McCormack St, Arndell Park NSW 2148 Phone Number: