Quadrise confirms two-shift production at Cepsa refinery

Manufacturing unit at San Roque switched to 24-hour production in January.

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Updated on 28 Mar 2017 13:46 GMT

Quadrise Fuels International plc has confirmed that production of its MSAR fuel at Cepsa's San Roque refinery in Spain moved to a two-shift production schedule in January - operating the MSAR Manufacturing Unit (MMU) on a 24-hour basis to produce the largest single batch of MSAR to date.

In its interim results for the last six months of the year, the UK firm said that production of MSAR during the period had "progressed well" and that incremental enhancements to the MMU were "proving to be helpful as we build up our operational experience within a refinery that processes a variety of different crude oils".

Quadrise noted that, since the start of the year, it has also been working with Cepsa to examine new opportunities to maximize the MSAR production capacity at the San Roque facility. Discussions are said to be "progressing well".

Maersk trial could resume in Q4 2017

Maersk is also said to be reviewing options to recommence and complete a 'letter of no objection (LONO) trial' on a new vessel from the fourth quarter of 2017 onwards. It follows Maersk's recent cancellation of the trial, which was confirmed by Quadrise earlier this month.

Last year, in July, following the installation of an MSAR manufacturing unit at the San Roque site, trials commenced with MSAR fuel from the refinery being supplied to and burnt by a nominated Maersk vessel on its regular scheduled route.

Maersk is cited by Quadrise as saying that the trial "progressed well"; however, operational issues with the trial vessel, said to be totally unrelated to MSAR, resulted in Quadrise making two announcements, on 2nd and 13th March respectively. The first of these announcements confirmed that there had been an incident that would require the trial vessel to undergo an unscheduled dry dock visit. The second announcement, on 13th March, stated that Quadrise had been advised by Maersk that it would not be possible for the trial to continue on the vessel following the dry dock visit as it would then be redeployed on a different service that would not permit further bunkering at Algeciras.

As a result, it was confirmed that the current trial on this vessel would be suspended once the remaining MSAR fuel on board had been consumed.

Quadrise also said on 13th March that Wartsila will be carrying out a detailed interim inspection of the trial vessel's engine to document the performance of MSAR fuel to date.

Wartsila LONO: the commercial trigger point

Whilst Quadrise still aims to start commercial operations in 2017, and to begin the commercial delivery of MSAR from the Cepsa refinery to an expanding number of Maersk ships, the company concedes that the suspension of Maersk's trial will have an impact on this timetable.

Quadrise says that for Maersk, a positive interim inspection and LONO by Wartsila is the trigger point for commencing commercial discussions.

"Maersk's decision will ultimately be taken on several factors, primarily economic and operational, that will include the economic and environmental advantages of MSAR in addition to their chosen approach to compliance with the new IMO open ocean sulphur standards that come into force in 2020," Quadrise noted.

In addition to its continuing discussions with Maersk, Quadrise says that it has also been increasing its activities with other shipping operators and that an interim LONO from Wartsila "will be a very positive attribute in progressing those activities".

"Alongside this, we will be continuing our discussions with a number of other producers in the major European and Asian bunker hubs and regional refining centres to provide additional sourcing opportunities," Quadrise added.

Financial results

In its financial results for the last six months of 2016, Quadrise posted a loss of GBP 2.4 million. The production and development costs for the period amounted to GBP 1.3 million, most of which related to the ongoing LONO trial with Maersk.

As at 31st December, Quadrise held cash and cash equivalents of GBP 7.0 million. This includes GBP 5.0 million (net of costs) raised through a placing and open offer during the period.