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2020 has to be where the rubber meets the road on business & project development, in my opinion.

Within CY2020:

1. Progressing 2-3+ pilots (or commercial trials).

There appear to be at least 4 or 5 projects that could progress to pilots or commercial trials. We've only progressed 1 so far (Morocco/OCP), but have a wide pipeline coming through.

The prospects that are likeliest to turn into pilots/commercial trials in CY2020, in my view, are: Morocco (?), European Oil Refiner (EOR), Kuwait, KSA.

I see it as possible that Younes could strike twice in Morocco and get us another trial there (e.g. with ONEE).

There are a wide range of other opportunities, including JGC, Merlin, Redliner, Maersk, etc, which are outside chances for CY2020 if they change their pace or strategy as was reported at the AGM.

Given the above, I would be disappointed if we were not to have progressed 2-3+ pilots in total by end of CY2020.

2. More than one project that has progressed from pilot to commercial trials agreements (ideally in operation).

Some of our pipeline are not megaprojects. I see this as a good thing; we can go from pilot to commercial trials within CY2020.

I hope that Morocco will be the first to adopt given the relative modularity of their industrial applications (e.g. kilns and drying equipment can be transitioned over one piece at a time).

Further, it was indicated at the AGM that should EOR choose MSAR, then they would likely be able to progress to commercial trials within 2020, and that transitioning to full commercial operations would be extremely simple.

Given this, I think at least two meaningfully sized commercial trials agreements is a modest target.

3. At least one project should have signed a full commercial contract (or be clearly transitioning to commercial operations).

Smaller projects should be less difficult to progress to commercial operations, and the economics and regulations of IMO 2020 should make things clear-cut.

It has also been indicated that self-consumption opportunities should be significantly easier to progress. We have at least 3 of those (EOR, Kuwait, JGC), and 2 which are front-runners (EOR, Kuwait). Some of these should be able to very quickly understand whether MSAR will meet their needs.

(Continued... 1/2)

BFSCo, I think thanks certainly a key element that makes the Morocco trial very interesting. The pilot is largely under QFI's control as they are producing the fuel themselves.

They will also presumably be very keen to commission a high-quality technical & feasibility report for commercial trials at the fastest possible pace (they will do some parts themselves, and other parts will require outsourcing where independence is needed, or external skills required).

My hope is that QFI can compress the gaps between each of these phases as much as possible so that we can be talking about commercial trials within a modest period.

I think one of the major themes at the AGM was about taking a greater degree of control and reducing the number of third parties involved for the current headline crop of projects.

For example:

The European Oil Refiner (EOR) is an internal refuelling project (i.e. changing from one fuel to another). That means the resid supplier, MSAR producer and MSAR consumer would be the same entity.

The Kuwait new refinery (Al Zour?) project is also an internal usage scenario. Mirroring EOR, this should be supply-produce-consume with a single customer.

The KSA project has been remoulded to bring as much of the project in-kingdom as possible. Now looking at in-kingdom supply of resid and MSAR production. Plus, early-stage plans to even expedite in-kingdom chemicals supply with Nouryon. Again, reduces counterparty risk and logistical complexity *considerably* -- and also increases in-kingdom value of the project, which is aligned with the strategic goals of the country (see: IKTVA project). Also, note that the majority of the parties (oil co, refiner, transportation, powerco, etc), would then fall under the sphere of influence of the project champions we hope to win within high-up government and ministry (via AKHG).

Similarly, for Mexico, JM described the potential role of MSAR in PEMEX as potentially being internal refinery usage (still early days).

Let me reemphasise that we need to crack each of these projects and make progress (whether trials or commercial), but the strategy makes sense from a "get it to market" perspective IMV. There are no 'gimmies' here; we are still a precommercial company with all the risks that implies.

Yes, I'm cautiously positive following the disclosures prior to the AGM. Some of the opportunities have fallen away or become more distant, but that just endorses the new strategy.

Some of the key takeaways to me are:

* A pilot trial has been announced in Morocco, with the expectation of moving to commercial trials (then hopefully sustained commercial usage). Consumption is in the 1 MMU's production per annum range. This will also be a great demonstrator. The pilot trial is largely under QFI's control as they are producing the necessary MSAR themselves at QRF.

* The European Oil Refiner needs to make a decision in fairly short order to prepare for IMO2020 impacts; that process is underway, and if MSAR is selected then QFI expect there would be a trial during 1H2020. Assuming MSAR were fully adopted, that would be in the 1-2 MMU range.

* Kuwait has a new refinery (presumably referring to Al Zour) and our partner has identified MSAR for a possible internal fuelling role [i.e. self-consumption]. Presumably it's still too early to know the precise role of MSAR could play and its scale, but the refinery is expected to produce 615,000 bbl/d (97,800 m3/d), which leaves probably 85,000-95,000 bbl/d resid. It was also mentioned there are potential MSAR uses for power and external supply to other clients. We will need to see if MSAR proves suitable for the role identified and whether we can progress to trials in the coming months.

* KSA seems to be kicking into higher gear again, with Al Khafrah organising meetings with high-up stakeholders in near term (possibly before year end, but near term either way). One would hope to see movement on KSA in the coming few months so we can understand the trajectory of the project.

Those are some of the top-line projects in my view, but also ticking along are Redliner/Mexico, JGC considering MSAR for an internal refinery role, etc.

Also perhaps Karpowership and their powership niche as a wildcard?

Of course, the SP is not currently recognising this progress, but I'm happy continue being patient as things develop.

[ Full notes: https://quorumzine.gitlab.io/quorum/content/2019/11/29/quorum-live-2019-agm.html#agm_notes ]

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