Quadrise makes progress as it still pins hopes to Saudi Arabia project

The AIM-traded firm said there were opportunities to use the facility at Cepsa for supply to the marine or power markets, with Cepsa remaining “supportive” of Quadrise, having recently hosted a refinery visit from a prospective Middle Eastern client which was said to have been well-received.

It said that prospective client also travelled to the UK and visited the Quadrise research facility (QRF) to witness its ‘MSAR’ product being produced from its own residues.

“There remain significant opportunities in the power market in the Middle East and the Far East and we are continuing to address these either directly or through our relationship with JGC Corporation,” the Quadrise board explained in its statement.

It said that, where appropriate, it was also looking to establish new relationships with counterparties who had a strong presence in key regional markets.

In the marine market, Quadrise said it had witnessed momentum building on the implementation of exhaust gas cleaning systems across all major segments, now including tankers, bulkers and container ships, in addition to the cruise and ferry markets where there had historically been a significant installed base.

It said the economic case for MSAR was also improving, with the spread between high sulphur heavy fuel oil and low sulphur fuels widening significantly in the futures market up to 2020 and beyond.

“This also reinforces the economic benefits of scrubber installation, versus <0.5% sulphur fuel use,” the board said.

“In addition, we are seeing increasing demand from ship owners looking for term high sulphur fuel supply contracts aligned with scrubber installation, which could provide an opportunity for MSAR supply to consumers and major hubs.”

The company also said it was progressing an opportunity in the petrochemical market, which it claimed proved MSAR technology was “adaptable” and could, the board believed, open up new potential markets.

In the upstream oil sector Quadrise said it was working with the owner of a “significant” low sulphur heavy oil asset where MSAR could, subject to necessary funding, be used as part of a number of processing facility solutions to enable lower cost steam generation to improve the economics of crude oil production and export.

“QRF has now been relocated to new premises, which has significantly reduced rental costs without any impact on the work that QRF does to support development and operations,” the board said in its statement.

“Alongside these activities, we continue to assess the potential to work with selected partners to accelerate our planned development activities.”

The company also pointed to its previous announcement on 9 April, which highlighted the challenges that led to the planned combustion boiler trial project in the Kingdom of Saudi Arabia (KSA) not progressing.

“This was a hugely disappointing outcome for the company, but was the result of the inability of the KSA oil and electricity companies to enter into a back-to-back agreement for the trial.

“Ultimately this led to the withdrawal of the refinery counterparty from the project, due to the KSA oil company not having signed the required fuel supply agreement.”

Quadrise said it understood that the KSA Ministry of Energy, Industry and Mineral Resources was formulating a new energy strategy for the country, which was expected to be published in June.

There were also reported plans to restructure the power sector in KSA, which was expected to include the current dominant supplier being split into a small number of companies, each with a similar mix of generation assets.

“This restructuring should, we believe, be a positive factor for Quadrise, creating a requirement to ‘sweat’ existing assets and reduce operating costs - primarily fuel costs.

“Even with the ambitious targets for renewables that have been put forward recently in KSA, liquid fuels will, in our view, still be a major fuel source for power generation and desalination in KSA for many years to come.”

Despite the challenges of working in the KSA, Quadrise said it continued to see “significant” economic and environmental advantages to the use of MSAR technology there.

Current HFO demand in the country exceeded domestic supply, and converting just of domestic demand to MSAR could save the country more than $500m per annum, Quadrise explained.

Recent increases in the prices of low sulphur fuels relative to HFO in the futures markets had materially increased the realisable savings from MSAR in recent months, and were likely to continue to do so leading up to and beyond 2020.

“Given the complex structure of the stakeholders in KSA, we are seeking to engage with the relevant ministries to illustrate the "In-Kingdom-Total-Value-Added" opportunity that implementing MSAR would enable in the short term, as a complementary enabler for KSA to progress longer-term goals for renewable energy in the future, at the lowest cost today.

“In addition, there are significant opportunities in the cement industry within KSA and the region that Quadrise is currently exploring with industry stakeholders as fuel subsidies are withdrawn.”