Quadrise has passed another major milestone on its route to commercialisation with contracts in place for the production of MSAR for LONO (Letter of No Objection) marine trials. This prepares the way for commercial adoption from end calendar 2016 onwards. It also clearly demonstrates Maersk’s continued commitment to the programme despite the low crude oil price. We place our estimates under review until there is more clarity on the volume of MSAR required for this phase.
A Quadrise MSAR manufacturing unit is to be installed and commissioned at the CEPSA San Roque refinery near Gibraltar adjoining the Algeciras bunker fuel supply hub. This will produce marine MSAR for use in the LONO trials scheduled to begin in calendar H116. These extended performance trials are expected to last nine to 11 months. LONO validation from engine manufacturers is the last remaining precondition before beginning commercial use of MSAR with progressive uptake across the Maersk fleet. The royalty agreement between Quadrise and Maersk has been amended to support demand from MSAR from other shipping lines once the fuel is commercially available.
The pilot project in Saudi Arabia is on track. This will involve a substantial coastal refinery producing MSAR and a major thermal power station then using the fuel to generate power. Management expects production capacity for the pilot to be installed ahead of an extended combustion demonstration during calendar H116.
In addition, Quadrise is to complete a detailed feasibility study for a mid-sized refining company which is evaluating MSAR for steam and power generation within a refinery complex.