By Ed Ballard
LONDON--Quadrise Fuels International PLC (QFI.LN), the developer
of a cheaper alternative to heavy fuel oil used in shipping and
power generation, said on Thursday that its commercialization plan
is taking longer than hoped, sending shares to their lowest level
in over a year.
Two projects have been delayed: a plan to produce fuel for the
shipping industry in partnership with A.P. Moller-Maersk A/S
(MAERSK-A.KO), and another to trial the fuel in power plants in
Saudi Arabia.
Quadrise also said it hasn't been badly affected by the slump in
the price of oil.
Shares dropped by as much as 14% to touch 18 pence, their lowest
level since Sept. 2013, before paring losses to trade 10% lower at
21 pence at 0924 GMT.
The company said it agreed to buy "up to two" commercial-scale
manufacturing units from ENH Engineering A/S to "ensure that
Quadrise will be ready to meet the needs of the Marine and Saudi
Arabian MSAR projects in 2015 and beyond." Quadrise said last month
it would "place orders for at least two new commercial-scale MMUs
in the near future".
In its marine arm, Quadrise said it no longer expects to find a
refinery at which to make the fuel and finalize supply agreements
by the end of 2014. Contracts are likely to be signed in the first
quarter of 2015, with commercial production to start in the second
quarter.
"Whilst the delay is regrettable, a number of refineries are
keen to engage with Quadrise and Maersk as the commercial drivers
for MSAR [multiphase superfine atomised residue] are advantageous,"
Quadrise said.
In Saudi Arabia, the evaluation of a power plant running on MSAR
in Saudi Arabia will now take place in fall 2015, not in the first
quarter. The company cited "the availability of base load power
plants prior to the high demand for electricity in the summer
season."
Quadrise said the business is more resilient than the energy
industry at large due to plunging oil prices.
"Fortunately for Quadrise the spread between refined oil product
prices, that underpin the MSAR business and oil refinery margins
respectively, have not been impacted to the same extent [as the
wider industry]," said Chairman Ian Williams.
Write to Ed Ballard at ed.ballard@wsj.com
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