18 December 2014
Quadrise Fuels International plc
("QFI", "Quadrise" or the "Company")
Programme Update and Purchase of MSAR Manufacturing Units
Quadrise, the emerging supplier of MSAR, a low cost alternative to heavy fuel oil in the shipping, refining and power generation markets, is pleased to provide an update on the Marine Fuels and Saudi Arabian programmes. In addition the Company announces that an agreement has been signed with ENH Engineering A/S ("ENH") to purchase up to two proprietary MSAR Manufacturing Units ("MMUs") designed for the processing of refinery heavy residues and production of MSAR fuel emulsions. ENH is a leading supplier of high quality bitumen emulsion manufacturing plant to the international refining and asphalt industries.
Highlights:
· The first long term production contract with an oil refiner for Marine MSAR Fuels is now expected to be executed in Q1 2015, a short delay, with fuel expected to be available during Q2 2015 to service the LONO programme.
· In order to meet production requirements for the Marine and Saudi programmes, Quadrise has placed an order for one refinery specification MMU for delivery early Q2 2015 and has agreed an option to acquire a second identical unit in 2015.
· The Saudi project is still anticipated to proceed in 2015 with the programme now scheduled to begin towards the end of the year, after the summer power demand peak.
With the initial objective of having the plant installed and assured fuel availability by end Q1 2015, Quadrise and Maersk have been working together to both select a refinery and execute agreements for the supply of Marine MSAR fuels by end 2014. Whilst discussions are advancing, it is now considered unlikely that contractual terms can be finalised and contracts executed until Q1 2015. As a consequence, commercial fuel production may now only start in Q2 2015.
Whilst the delay is regrettable, a number of refineries are keen to engage with Quadrise and Maersk as the commercial drivers for MSAR are advantageous.
The increased time taken to identify and agree terms with a preferred refinery has provided the opportunity to closely define the specifications for the MMU's required to meet current and anticipated regulatory standards for EU refinery sites. Consequently, on 17 December 2014, the Company signed an agreement with ENH Engineering A/S ("ENH"), for the supply of one 1,000 ton per day refinery specification MMU, with an option for a second identical unit exercisable at the Company's discretion during 2015.
In Saudi Arabia the client has agreed that a commercial scale demonstration project, including both MSAR fuel production in a domestic refinery and combustion of MSAR fuel in a base load thermal power station should take place during 2015. Contractual terms for this programme have been proposed but have not yet been finalised. On success, this is expected to lead to a progressive conversion to MSAR fuel production at qualifying refineries in Saudi Arabia and to substitution of both heavy fuel oils and crude oil in thermal power stations in the Kingdom.
The client requirement for extended operations of the power plant on MSAR fuel as the basis for evaluation has proved to be problematic during Q1 2015 due to the availability of base load power plants prior to the high demand for electricity in the summer season. Given these practical difficulties the focus has moved to implementation during the autumn of 2015. This re-scheduling allows more time for preparation of the refinery MMU installation and power plant fuel systems. This will be beneficial in ensuring the successful delivery of the MSAR project in Saudi Arabia.
Commenting on this development, Ian Williams, Executive Chairman of QFI, said:
"Both the Marine LONO programme and the Saudi Arabian demonstration project are high visibility 'milestone' activities for Quadrise involving major market entries with commercial scale installations and operations. Quality standards will be critically important throughout and ENH continues to impress Quadrise - having demonstrated high quality standards in every facet of their activities and throughout our association with them to date.
We are delighted to have placed the order with ENH for up to two new MSAR commercial scale manufacturing units that will ensure that Quadrise will be ready to meet the needs of the Marine and Saudi Arabian MSAR projects in 2015 and beyond.
The recent decrease of the crude oil price has been a shock to the oil sector at large. Fortunately for Quadrise the spread between refined oil product prices, that underpin the MSAR business and oil refinery margins respectively, have not been impacted to the same extent. Furthermore the Company is privileged to be dealing with major clients who have experience of these economic cycles and hold a longer term outlook for their businesses."
For further information, please refer to the Company's website at www.quadrisefuels.com or contact:
Quadrise Fuels International Plc |
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Ian Williams, Executive Chairman |
+44 (0)20 7031 7321 |
Hemant Thanawala, Finance Director Jason Miles, Chief Operating Officer |
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Nominated Adviser |
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Smith & Williamson Corporate Finance Limited |
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Dr Azhic Basirov |
+44 (0)20 7131 4000 |
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Ben Jeynes |
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Broker |
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Peel Hunt LLP |
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Richard Crichton |
+44 (0)20 7418 8900 |
Matthew Armitt Ross Allister |
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Public & Investor Relations |
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Bell Pottinger |
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Philip Dennis |
+44 (0)20 3772 2500 |
Rollo Crichton-Stuart |
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