Member Info for foxm

I'm giving up trying to work out WTF is going on in Ecuador!! So we're not puting in an official bid, we're working direct with the refinery. So if they decide to use MSAR, is the official tender process cancelled then? Jason said something about $2 billion plus which needed to be invested, almost like he didn't expect it to happen. I need to listen to that again. Even more confused, not a clue what's going on, time to wait for the real story when it comes via RNS, it's a waste of time guessing I think.

Cool, I was hoping they would concentrate on the power market at the start, but their comments about direct bunker sales and how they expect it to sell at a premium price to WTI, just like VLSFO does, threw me off. Also, one 10,000 bpd plant would be nowhere near enough to consider entering the marine market, they would need at least 3 or 4 up and running to start thinking about supplying one of the larger shipping companies. Maersk buy about 7 million tons of low sulphur fuel a year, so you would need amost a dozen plants just to supply them. As you say, for the future.

But presumably only after a 4000 hour LONO trial? You could argue that VLSFOs didn't need a LONO, but that's a completely different argument, which I think we've had before anyway.

I do like the PQE possibility a lot, the prospects and potential are very exciting, but that is still the missing part of the jigsaw for me. Given the history QFI have had over the last 5 or 6 years trying to get a LONO in the bag, do the PQE consortium have a plan for this? They have mentioned several times that the output from Asphalt Ridge could be sold directly to bunker hubs as a marine fuel, bypassing the need for a refinery, which is completely correct. But who the hell is going to buy it if no LONO is available? Have they been talking to shipping companies who are interested? I would hope that they have some sort of strategy for this, it would be very dangerous and a serious risk to their business plan if they don't.

I presume so Torreaguas, we know that the techno-economic studies were sent at the end of April / start of May I think, so it's been almost 4 months since then.

"Yeah, I think that getting in now as an interim solution would place us very well to become a permanent solution (i.e. prove just how good the tech is!). At the moment Esmeraldas produces something like 48% residual products. Clearly that can't be sustained. "

dustofnations, my thoughts on your hunch about using MSAR as an interim solution have become even more positive today, after I found that article about the upgrading of one of the two Esmeraldas power plants. From the Half Year results -

"South America (Freepoint Commodities) – QFI and Freepoint jointly met with senior management of a national oil company in South America in very early January 2020 where there is an exciting MSAR® opportunity for refinery refuelling, leading to domestic power generation and export opportunities that would reduce energy costs and emissions for the country. Follow-up meetings at the relevant refinery were attended, in person, by three members of the Quadrise team, including Jason Miles (CEO) and Mark Whittle (COO) in early-March, and actions are progressing from this meeting to ensure that we have the all the refinery data needed to complete the required techno-economic studies during March/April. We will then present a roadmap for trial MSAR® testing at the refinery and a neighbouring powerplant as a precursor to commercial production and supply."

Now that we know the country and even the refinery, the "neighbouring powerplant" must be Esmeraldas I and II. Those two plants combined are only 209 MW, so we could probably power both of them with just one MMU. We know that 2 MMUs can power 1 x 400 MWe boiler, so it should just about be possible if they run it 24/7. My initial thoughts were that we would need 2 or 3 MMUs, but if we only need one, that makes it much more feasible IMO and it could maybe be dropped in within 6 months. As you said, even if we don't win the Esmeraldas tender, they could still run the power plants on MSAR for a few years until the upgrades are done, and there might still be enough residue left to feed one solitary MMU even afterwards. Fingers crossed these upgrades they are doing to the Esmeraldas I plant will include the minor modifications necessary to run the test with MSAR.

Certainly not bad news, it would be bad if they were closing it.

https://www.bnamericas.com/en/news/thermo-revamp-advances-in-ecuador-with-new-call

Ecuadoran state power corporation Celec’s Termoesmeraldas business unit has launched a bidding process to help complete an overhaul of the 125MW Esmeraldas I plant (pictured).

The tender entails providing component installation services for the second stage of the boiler’s rehabilitation, including materials and supplies.

Termoesmeraldas also operates the 84MW Esmeraldas II plant, which, along with Esmeraldas I, receives fuel oil from state oil company Petroecuador’s Esmeraldas refinery.

https://www.compraspublicas.gob.ec/ProcesoContratacion/compras/PC/informacionProcesoContratacion2.cpe?idSoliCompra=jJJY3LqH9pxAAVJNCR3uBVVMgBqDF1Adpk3CgrWTwgY,

MAINTENANCE AND REPAIR SERVICES FOR BOILER EQUIPMENT OR VARIOUS INDUSTRIAL PIPE WORKING SYSTEMS USD 7,519,392.04

https://www.celec.gob.ec/termoesmeraldas/index.php/central-termica-esmeraldas-i-2

From June, but the first time I've seen it.

https://www.bnamericas.com/en/news/ecuador-to-award-esmeraldas-refinery-operating-contract-by-year-end

The Ecuadoran government is advancing with the process of awarding a concession to operate the state’s Esmeraldas oil refinery and the construction of a waste conversion train, and the COVID-19 pandemic has not changed bidding plans in the hydrocarbons sector.

“The process is on the right track. The expectation is to call for bids no later than August and sign the contract at the end of the year," a source at the energy and non-renewable natural resources ministry told BNamericas.

The source added that there is interest from US and European companies to win the 20-25 year contract to operate the refinery and build the train to convert waste into finished products with capacity of 50,000b/d.

Currently, finished products account for only 40% of output and the rest is waste.

The ex-president of Ecuador apparently isn't very happy about it though, I'm having trouble getting it all translated, google is playing up. Anybody fluent in Spanish? I can only order beer and tapas.

https://twitter.com/MashiRafael/status/1298155256996659200

I don't think there is much connection between the RNS and imminent news 46G, it was actually about 2 months overdue, last year it was at the end of June -

https://www.investegate.co.uk/quadrise-fuels-intnl/rns/issue-of-share-options/201906271720037151D/

The grant of options would have to be approved by the board at one of their meetings, maybe there was a slight delay this year, because of COVID or holidays.

The other thing which points in our favour are the two much smaller refineries, one of which they wanted to close. But the "interesting solution" for Esmeraldas could also be used on them according to Ortiz. I'm not sure that can be a hydrocracker. 20,000 bopd input, 40% output is HFO, so 8,000 barrels. But 3,500 of that would be cutter stock to dilute the residue, so 4,500 barrels of residue a day. Is it still possible to get a hydrocracker that small? It would be like a Dinky toy version. Would it be economically viable? Sticking in an MMU or two wouldn't be a problem though.

So maybe install MMUs and use MSAR ASAP until a more permanent solution can be designed and installed, 2 or 3 years down the line? That all depends on what Freepoint would think about it, would it be worth their while?

I don't know why that article appeared in my search today, it's from 6 days ago, but searching for "petroecuador esmeraldas" in the Past 24 hours and it appeared. Maybe google only found it 8 hours ago. The timeline suggested maybe shouldn't have come as too much of a shock, I found this over the weekend, it mentions that "that more than 90 firms have shown interest in participating".

https://www.latinvex.com/app/article.aspx?id=4779

So we might still be a strong favourite and the cheapest/quickest solution, but there is a lot of competition. The article certainly backs up your point though, regarding the urgency required in relation to Ecuador's economy.

It looks like we can forget about Esmeraldas until Feb/March next year.

https://shorturl.at/LNTY7

Just when you think we're getting close, the can gets kicked down the road for 6 months once again. It happens every time. I suppose we still have the two possible upstream projects there, which are smaller and could come in sooner.

I couldn't agree more gotreal, they are shambolic.

David Messer, on the other hand, his record is simply outstanding, truly world class, you can't get much better.

If we land something substantial in the next month, and we have more than one horse in the race, funding will be a non-issue. If we hit 15 or 20p a share, many investors will be exercising their warrants. There are 23,277,519 warrants at 7.48p outstanding and Bergen have 4.9 million at 5.78p. If we hit 15p, the majority of them will probably be exercised and that would provide just over £2 million in additional funding for day-to-day expenses. Any funding required for projects such as Ecuador would probably come in the form of debt, with someone like Freepoint partnering us, it shouldn't be a problem getting a loan.

If we get the Esmeraldas refinery contract with 44,000 barrels of MSAR production a day and the share price is only 10p, that would mean we were trading on a P/E ratio of about 2.5. A tad low in my opinion.

Clubber99, not quite, 110,000 bpd is the input of crude oil to the refinery, but we know that these old refineries are not set up for such heavy grades of crude, so 40% of the output is HFO, roughly 44,000 bpd. If in partnership with Freepoint Commodities in Tolling mode, our margin would be $12-13m p.a for every 10,000 bpd.

I can't see MSAR being a specific condition of the tenders, but it's the only sensible option. Hydrocrackers cost a huge amount of money and a project to install one takes about 4 years from start to finish.

Esmeraldas refinery tender at hand

https://www.bnamericas.com/en/interviews/with-the-esmeraldas-refinery-tender-at-hand-are-more-bidding-processes-on-the-way

The minister of energy and non-renewable natural resources, René Ortiz, talking with BNamericas, says that the oil sector has regained momentum and that, following a decree signed by President Lenín Moreno in July, the tender will soon be held to offer the concession to operate the state-owned Esmeraldas refinery, including the construction of a process to convert residues.

The executive decree in July authorizing the concession to the private sector for administration and operation gives legal protection to the process. The legal structure is ready; the terms of reference are now prepared and we're close to starting the tender this month.

The process is so interesting that some companies have even asked about the La Libertad [processing capacity of 45,000b/d] and Shushufindi [20,000b/d] refineries.

https://www.naturalgasintel.com/amlo-set-to-announce-energy-infrastructure-economic-recovery-plan-in-coming-weeks/

Discussions with business chamber Consejo Coordinador Empresarial (CCE) are ongoing to finalize the plan, which will include energy projects, López Obrador, or AMLO, said.

Earlier this year Energy Minister Rocío Nahle, who is under quarantine after testing positive for coronavirus, said there would be room in the plan for the private sector to invest in Mexico’s oil and gas sector.

Also expected to be within the infrastructure plan are projects to refurbish the nation’s six other refineries, where utilization rates fell below 40% in 2019.

Our warrants are exercisable at 7.48p, you got half the number of Open Offer shares you subscribed for.

The warrants at 5.78p are Bergens, the RNS on 27th Sept 2019 refers you back to the one on 23rd August, which was the Bergen deal. From that RNS -

"As part of the Transaction, and subject to receiving the Authority (defined below), the Company will also issue 4.9 million 36 month warrants to subscribe for new Ordinary Shares ("Warrants") to the Investor by way of a warrant instrument (the "Warrant Instrument") initially exercisable at 5.78 pence per Ordinary Share, subject to anti-dilution and exercise price reduction provisions included in the Warrant Instrument. "

A decision from the European Refiner should be due in the next 5 or 6 weeks too -

As noted previously, the client is now comparing the economics of MSAR® with another refinery solution (which requires complex refinery testing during Q2 and Q3 2020) to enable IMO 2020 compliant fuel supply. As a result, we are currently anticipating that the client will decide at the end of Q3 2020, though this timing may be subject to change if the testing is delayed for operational or other reasons. If MSAR® is selected, the Company would expect to finalise the site trial agreement during Q4, unless there is a delay, including the schedule for the refinery refuelling in the quarter following a positive decision being made.

"We are carrying out, as in present tense? "

The techno/economic study was sent in May, but work on the official tender is presumably still ongoing though, due before the end of the month fingers crossed.

The daddy of them all might not be much further behind, from the Interim Report more than 4 months ago -

ECUADOR: Follow-up meetings at the relevant refinery were attended, in person, by three members of the Quadrise team, including Jason Miles (CEO) and Mark Whittle (COO) in early-March, and actions are progressing from this meeting to ensure that we have the all the refinery data needed to complete the required techno-economic studies during March/April.

MEXICO: Agreements are being finalised to enable detailed information to be shared electronically by the national oil company, which will enable QFI to promptly complete the relevant techno-economic studies for MSAR® on candidate refineries currently producing fuel oil.

The standard MMU is 1000 tons a day, so a very quick test. I think we have a baby MMU as well, 500 tons a day, maybe we could send them that one.