mini-GTL Project MONETIZATION OF FLARES BY TRANSFORMATION INTO OIL Saint Petersburg, 21 st – 23 rd June, 2012
1 PROBLEM: over $10 bln venting XVI St. Petersburg International Economic Forum, 21 st – 23 rd June, 2012 annually No valuable solutions for gas Up to 40 bcm/year is flared monetizing at remote areas; in Russia* ( 150 bcm abroad); Huge investments in More than 300 mln tons of infrastructure are required; pollutants are vented; Penalties and political No value in gas , zero price, a feed for flares … pressure are growing; make a great opportunity for monetization
2 mini-GTL SOLUTION: XVI St. Petersburg International Economic Forum, 21 st – 23 rd June, 2012 how to turn losses into profits? Three main steps: 1. To buy mini-GTL fnd transform flares into synthetic liquid (GTL products); 2. To compound GTL with mineral oil and to 3. To transport the mixture by the existing oil pipeline. There are five main benefits: 1. 100% reduction of and energy wasting and penalties; 2. 3 - 4% growth of field’s yield; 3. No investments in unprofitable infrastructure; 4. Carbon economy benefits; 5. No risks of license withdraw.
3 Our Target Market – small remote XVI St. Petersburg International Economic Forum, 21 st – 23 rd June, 2012 fields • The total market size (RF) – up to 40 bcm /year (up to $10 bln), over $20 bln abroad • The target market niche – up to 20 bcm /year ( up to $5 bln). Number of Size (mln cm/year) % of fields / % of APG fields BIG - 300 mln cm 3 – 5% − Settled at good areas; 30 - 35% 5 - 10 − Very attractive for oil Co MEDIUM - 100 - 300 mln cm 5 – 10% − Attractive if located at developed 10- 15 30-35% areas; SMALL< 100 mln cm 85 - 95 − Remote areas, lack of consumers >100 30-35% − Unprofitable, better to flare Most of flares are located at small fields
Profitable mini-GTL plant is based 4 XVI St. Petersburg International Economic Forum, 21 st – 23 rd June, 2012 on two innovative technologies: GazohimPOX technology* OCG/Velocys F-T technology * • • speed increase in 30 times; speed increase in 8 times; • • steel intensity reduction in 2 steel intensity reduction in 10 times; times; • • increase in specific productivity of increase in specific the reactor in 2 times; productivity in 7 times; • • rejection of water treatment increase in transfer of heat in and/or oxygen production 200 times; • САРЕХ reduction in 2 times; • САРЕХ reduction in 5 times; • ОРЕХ reduction in 2 times. • ОРЕХ reduction in 3 times. IRR of mini-GTL plant exceed 20%** *In comparison with SMR or traditional POX process (for GazohimPOX part) and with traditional reactors with fixed-bed catalyst for OCG F-T). ** taking into account the reduction in payments for gas flaring
5 Marketing strategy – getting through XVI St. Petersburg International Economic Forum, 21 st – 23 rd June, 2012 oil majors… Our key customers – big oil companies and majors: • Own big amount of small and remote oilfields; • Need a lot of mini-GTL plants (in case of pilot project success); • Presented in all oil-producing regions in Russia and abroad; • Clear business model – direct selling to oil companies. Expected demand for mini-GTL plant Company 2015 2016 2017 2018 Total 2 3 4 4 35 Rosneft* 1 2 3 3 25 LUKOIL* 1 2 1 2 16 TNK-BP* 3 4 5 5 40 Others 7 11 13 14 116 Total * working groups with Gazohim Techno LLC
6 IRR of mini-GTL plant exceed 20% XVI St. Petersburg International Economic Forum, 21 st – 23 rd June, 2012 Estimation of economic efficiency by operating activities NPV@15%, th.USD 1 809 IRR, % 15% DPBP, years 17,0 PBP, years 6,5 Estimation of economic efficiency, taking Estimation of economic efficiency, taking into account the effect of sales quota for into account the effect of reduction of the reduction of CO2 emissions (Kyoto fines Protocol) NPV@15%, th.USD 24 119 NPV@15%, th.USD 15 670 IRR, % 22% IRR, % 19% DPBP, years 7,3 DPBP, years 9,3 PBP, years 4,5 PBP, years 5,0 Estimation ofeconomic efficiency, taking into account the effect due to sales of quota for the reduction of CO2 emissions (Kyoto Protocol) and the effect of reduction of fines NPV@15%, th.USD 37 980 IRR, % 26% DPBP, years 5,5 PBP, years 3,8
7 OUR TEAM: all competences are XVI St. Petersburg International Economic Forum, 21 st – 23 rd June, 2012 covered Dolinsky Sergey - CEO, former Head of laboratory of synthetic fuels and nanotechnology of Russian Institute of Fossil fuels, PhD Chemistry - POx technology co-author. Pchelintsev Denis – Deputy CEO, former director of gas processing projects, CEO of Technology and designing institute, PhD Engineering – Project director; Nikolay Usachev - Institute of Organic Chemistry, Doctor of chemical sciences – catalysts science leader, realized a number of catalysts projects for Shell, Amoco, Amoco-BP, Cambrex, UOP. Аnna Lee Y. Tonkovich - Chief Technology Officer (CTO) of Velocys Inc (Oxford Catalysts Group PLC), Doctor of science in Chemistry, FT-technology co-author, Inventor of the year 2010, a consultant of the project. Sergey Medvedev – Financial Director, partner, former Investment Director of TPG-Aurora, Alfa Assets Management , MBA LETI-Lovanium International school of management.
8 XVI St. Petersburg International Economic Forum, 21 st – 23 rd June, 2012 Required capital Uses of capital Name mln.USD Construction of pilot experimental mini-GTL 13 plant 4 OPEX 17 Total Sources of capital Amount, Name USD mln 5 Sk Foundation GRANT Potential investor 12 Total 17
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