GENOIL AND CHINESE REFINERY GROUP SIGN LETTER OF INTENT TO BUILD GENOIL UPGRADER AT HEBEI REFINERY
TSXV SYMBOL: GNO
OTCBB SYMBOL: GNOLF.OB
EDMONTON, AB. October 3, 2006.- Genoil Inc. is pleased to announce the signing of a Letter of Intent (“LOI”) with Hebei Zhongjie Petrochemical Group Company Ltd., to proceed with the design and installation of a 20,000 barrels per day Genoil Hydroconversion UpgraderTM (“GHU”) at their refinery in Nampaihe Town, Huanghua City, Hebei, China, pending completion of a final definitive agreement and arrangement for the required funding.
The LOI provides that 10% of all net profits from the GHU are to be received by Genoil for so long as the refinery remains in operation. As a next step Genoil will immediately begin work on the first stage of the project’s engineering design by initiating a Front End Engineering and Design (FEED) package. Meanwhile, prior to the completion of the FEED engineering studies, Hebei Zhongjie Petrochemical will make arrangements for the shipment of oil for testing at the Corporation’s pilot facility in Two Hills, Alberta. This project has a planned start up date of late 2009 or early 2010.
Following the ‘Memorandum of Understanding’ announced in February of this year, the signing of this LOI represents the second step in a process expected to result in the execution of a definitive agreement. Prior to completion of such a definitive agreement, costs and operating parameters must first be established by FEED engineering studies and the testing of Zhongjie oil completed at the Genoil pilot facility.
A delegation of representatives from Hebei Zhongjie Petrochemical Company arrived on September 22, 2006 to visit the Genoil pilot plant facility and to discuss both the configuration and contract terms for the GHU to be installed at their petrochemical refining complex. Genoil originally entered into a ‘Memorandum of Understanding’ with Hebei Zhongjie Petrochemical Group February 28, 2006 to jointly develop and build the first major commercial heavy oil upgrader in China with a capacity of 30,000 barrels per day based on the GHU technology.
After lengthy discussions regarding how to properly integrate the GHU upgrading technology with the existing refinery equipment, the decision was made to drop the throughput capacity from 30,000 barrels per day to 20,000 barrels per day to meet the refinery’s and petrochemical complex’s specific feed requirements. Mr. Guo Chen Yu, Vice President and head of the Hebei Zhongjie Petrochemical Company’s visiting delegation stated, “We are very pleased to have reached an agreement with Genoil. We believe the Genoil GHU technology will be of great help in addressing the shortage of light oil in China. China now has to accept heavier sour oil from exporting countries and we view the GHU as a method of being able to refine the heavier sour crude into motor fuels to meet growing demand in China. Hebei Zhongjie believes in the ability of the GHU to meet the refineries need to process the heavier sour oil and increase output of refined products.”
Mr. James Runyan, Genoil’s Executive Vice President and Chief Operating Officer stated, “We are very pleased to have reached an agreement that moves this important upgrading project to the next stage of development. With both the world and China becoming increasingly reliant on heavy oil in the years ahead, Genoil is pleased to be working with Hebei Zhongjie in pioneering the first upgrading facility in China designed to relieve constraints affecting the supply of oil, thereby meeting the growing demand for oil and refined products in China’s fast growing economy.”
Genoil is a technology development and engineering company providing environmentally sound solutions to the oil and gas industry through the use of proprietary technologies. The GHU is designed to economically convert high sulphur heavy oil into more valuable light upgraded oil, high in yields of transport fuels, while significantly reducing the sulfur, nitrogen and other contaminants.
Genoil’s shares are listed on the TSX Venture Exchange under the symbol GNO, as well as on the OTC Bulletin Board under GNOLF.OB.
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Chief Operating Officer & Executive Vice President
ADVISORY: The TSX Venture Exchange has neither approved nor disapproved of the information contained herein. Certain information regarding the company, including management’s assessment of future plans, strategic partnerships, operations, financing outcomes and the ability to negotiate a definitive agreement on terms acceptable to both parties may constitute forward-looking statements under applicable securities law and necessarily involve risks associated with an oil and gas technology development corporation, including competition from other technologies and the ability to access sufficient capital from internal and external sources. As a consequence, actual results may differ materially from those anticipated. The Corporation assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those contemplated by the forward-looking statements. Additionally, statements included in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks and uncertainties such as competitive factors, technological development, market demand, and the company’s ability to obtain new contracts and accurately estimate net revenues due to variability in size, scope and duration of projects, and internal issues.
Further information on potential risk factors that could affect the company’s financial results can be found in the company’s disclosure materials filed on SEDAR at www.sedar.com and with the Securities and Exchange Commission.