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Hebei Zhongjie Petrochemical and Genoil sign contract

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Hydrocarbon Engineering,

Hebei Zhongjie and Genoil Inc. of Canada have signed a contract and plan to establish a new company called Dora Energy Technology Company this month, that will construct one of the world's most advanced heavy oil refineries, utilising Genoil GHU Technology. Hebei Zhongjie Petrochemical has already invested CNY25 000 000 to date and the parties have completed a new feasibility study and technological selection required for the new refinery project. A well known private Chinese engineering firm has been selected for the engineering, who estimate that the project will generate a 32% rate of return on equity and will have a payoff of seven years. The feasibility study encompasses all economic calculations including the capital costs, the operating costs and necessary factors as part of the package required by the Chinese lending source.

The required feedstock has been lined up and the sales of necessary contracts for finished products, sufficient to amortise the loan from the bank, will be organised. The balance sheets of the feedstock provider and the buyer of the finished products are sufficient to stand behind their commitments. The complete financing package that the joint venture has prepared will be modelled after the way Shell financed their US$40 billion Sakhalin LNG project in Russia, which lined up the financing based on signed long term contracts for input and output. The parties are exploring larger projects in China, and around the world, with this in mind. Genoil and Hebei Zhongijie Petrochemical Group are looking to expand co-operation and increase the size of the project, the construction of which should begin shortly.

"China's economy has grown steadily at a pace unprecedented in modern history. Energy must keep up with China's fast pace growth and satisfy its growing appetite for oil. Genoil's superior technology and strong international relationships are important to ensuring energy security for China. We are proud to be working with Genoil to build one of the most advanced residue upgrading refineries, which will lower the cost of energy for consumers in China." Says Mr. Yu, President of Hebei Zhongie Petrochemical. “We are very familiar with this technology and in our opinion Genoil is capable of supplying millions of barrels a day of crude oil to the Chinese market through international relationships.”

Yu continued, “Chinese refiners are looking to get more transportation products, namely gasoline and diesel, out of each barrel of crude oil and residue. They are looking for technologies, which can take advantage of lower cost heavier feedstocks in order to improve their margins.”

Zhongjie and Genoil have a long history of cooperation together. Feedstocks have been tested at Genoil's Two Hills upgrading facility, and the Genoil technology, and results, were impressive.

Adapted from press release by Francesca Brindle

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