7 April 2017
Quadrise Fuels International plc
("Quadrise", "QFI" or the "Company")
Update on Maersk
Quadrise Fuels International plc (AIM:QFI), the emerging supplier of MSAR® emulsion technology and fuel, enabling a low-cost alternative to heavy fuel oil (one of the world's largest fuels markets, comprising over 450 million tonnes per annum) in the global shipping, refining and power generation markets, announces that the Company has noted information in the public domain relating to Maersk Line A/S ("Maersk") and its likely plans for compliance with upcoming environmental legislation.
The Company has noted a presentation given by Maersk Oil Trading that indicated Maersk's initial approach to compliance with the International Maritime Organisation's ("IMO") 2020 sulphur limits to be implemented in 2020 will be to use compliant fuel (less than 0.5% sulphur), rather than installing exhaust gas scrubbers ("Scrubbers") and using higher sulphur fuel. The Company's understanding is that this approach has not been formally adopted by Maersk but that this is anticipated to be adopted by Maersk in the near future.
Marine MSAR® supplied to date has been higher than 0.5% sulphur and one option in the future is to use such fuel together with Scrubbers to achieve IMO 2020 sulphur limit compliance. For operators who choose to use a compliant fuel, a second option would be for QFI to work with refiners or suppliers to produce a compliant (less than 0.5% sulphur) Marine MSAR®, but this would be dependent on availability of low-sulphur residual streams and further work is being carried out to assess the viability of this solution.
Maersk has reaffirmed that the MSAR® trial has been successful to date and it will continue to work with Wärtsilä to ensure that a detailed interim inspection report is prepared following the recent inspection and that following this an "Interim LONO" will be issued - which is expected to confirm that Marine MSAR® fuel is safe and suitable for Wärtsilä 2-stroke engines.
Maersk has further confirmed that it wishes to continue to work with Quadrise to explore the wider commercial options for Marine MSAR® after the issuance of the Interim LONO. Whilst the Board of the Company has not yet been able to fully assess the effects of Maersk's anticipated policy decision, it is now expected that the timetable for continuation of the trial in Q4 2017 and commercialisation of Marine MSAR®, as originally envisaged to commence with Maersk later this year, will be impacted.
Despite this indication from Maersk, QFI continues to believe that the industry will ultimately move to the use of Scrubbers and high sulphur fuel as the most economic compliance option and that Marine MSAR® will enable operators to obtain additional economic and environmental advantages over the use of heavy fuel oil.
Mike Kirk, Executive Chairman, said:
"We understand Maersk's likely decision to adopt an approach to 2020 compliance that minimises its capex commitments in the short-term. However, there remain significant challenges for the bunker industry to ensure that there will be the required quantity and quality of compliant fuel available from the refining industry for the operators. QFI, like many in the industry, continues to believe that the use of Scrubbers and high sulphur fuel will be the lowest cost option for marine operators and we will continue our efforts to commercialise MSAR® for the global marine industry.
We look forward to getting the results of the interim inspection and the Interim LONO and working with Maersk to pursue the commercial opportunities for MSAR® within the global marine industry. The confirmation of the positive trial programme results to date combined with a positive Interim LONO will enable Quadrise to progress its plans for commercialisation of Marine MSAR®, with an initial focus on those marine operators who have, or are planning to install Scrubbers as their preferred compliance option."
It is also worth reiterating that since the beginning of 2017, we have been working with Cepsa to review new opportunities for utilising the spare MSAR® production capacity at the facility for new customers in the marine and power sectors and these discussions are progressing well.
We are also progressing plans for the commencement of the production to combustion trial in KSA in late 2017 - which will require significant engineering and operational support during the design, procurement and commissioning stages - in addition to the continued support during the extended production campaign to produce the significant quantities of MSAR® fuel required for the combustion trial.
In addition, our discussions with a number of oil majors and refiners in Europe, the Middle East and Asia are continuing and plans for evaluation of sample residues at the Quadrise Research Facility from a number of refineries are an integral part of this process and these are expected to be progressed during the remainder of 2017. These cover a range of applications including marine, power and refinery refuelling."
Niels H Bruus, Head of Future Solutions of Maersk Line A/S, said:
"As we have previously confirmed, during the MSAR® trial programme Maersk has enjoyed a close and professional collaboration with our technology partner QFI and supply partner CEPSA, resulting in a smooth operation during which the MSAR® fuel has performed well. The interim inspection has now been completed by Wärtsilä and we will be working with them to ensure the prompt release of the interim inspection report and an Interim LONO for MSAR® use. We will then work collaboratively with QFI to use these important milestones to progress the commercialisation of MSAR® to the wider global marine industry.
This announcement is inside information for the purposes of Article 7 of EU Regulation 596/2014.
For further information, please refer to the Company's website at www.quadrisefuels.com or contact:
Quadrise Fuels International Plc |
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Mike Kirk, Executive Chairman |
+44 (0)20 7031 7321 |
Hemant Thanawala, Finance Director |
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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 |
Ben Jeynes Katy Birkin |
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Broker |
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Peel Hunt LLP |
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Richard Crichton |
+44 (0)20 7418 8900 |
Ross Allister |
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Chris Burrows |
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Public & Investor Relations |
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FTI Consulting |
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Ben Brewerton |
+44 (0)20 3727 1000 |
Sara Powell |
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