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Velocys and Morimatsu ink MoU

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Hydrocarbon Engineering,

Velocys plc (VLS.L) has announced that it has signed a memorandum of understanding (MoU) to establish a strategic alliance with Morimatsu (Jiangsu) Heavy Industry Co. Ltd, a subsidiary of Morimatsu Industry Co. Ltd (Morimatsu).

Morimatsu will be Velocys’ preferred supplier of module engineering and fabrication services for the plants. Velocys believes that this will help to drive down costs for GTL and biomass-to-liquids (BTL) plants based on the company’s technology by optimising the design and fabrication of plant modules.

The two companies have been working together for the 18 months on the modular design of the Fischer-Tropsch (FT) section for a range of plant sizes; a design that will deliver targeted reductions in both capital cost and plant footprint.

They have identified strategic synergies that underpin an alliance where the partners shall collaborate with other strategic partners to further drive down costs across all areas of the plant, through innovative modularisation. This collaboration will extend to both GTL and BTL plants. Morimatsu will continue to commit significant resources during this ongoing work programme.

Velocys expects the terms of the MoU to be reflected in legally binding documentation within the next few months.

David Pummell, CEO of Velocys, said: “The potential benefits of further modularisation of smaller scale GTL plants are significant in terms of reduced plant build schedule, reduced risk of delays, lower CAPEX and OPEX. Morimatsu has a world class team of engineers and impressive fabrication facilities in China. I am confident that together, Morimatsu and Velocys will continually improve the plant offer to our customers, underpinning both the economics and the delivery of an integrated solution in our renewable fuels and stranded gas markets. I look forward to providing further details of this deal and other strategic alliances that will support our new strategy, as we roll them out.”

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