GENOIL INC. PROVIDES UPDATE
Calgary, Alberta, Canada – June 23, 2008 – Genoil Inc. (TSX.V: GNO; OTCBB: GNOLF.OB) is pleased to provide an update to the investment community on our heavy oil and refinery residue upgrading project with Haiyitong Inc. (“HYT”).
Local state media reported last Thursday that China will raise prices of refined oil products. This will have a material positive impact on the HYT project. An increase in refinery products selling prices would considerably raise the overall profitability for both participants in the HYT project and increase an already robust rate of return for the project. Genoil believes that by making the HYT project more profitable this will assist the Corporation in finding project financing.
Genoil’s engineering team led by Peter Chung, has substantially completed the first level of design of the planned 20,000 bpd upgrader. This enabled our Chinese Engineering, Procurement and Construction (“EPC”) contractor to get estimates of the cost to build the plant and to estimate profitability with 75% accuracy.
“Our engineers have been working on this project for some time and we believe they have done an excellent job. We are pleased with the progress being made so far. Genoil considers the results of this study to be very promising, and HYT is keen to go to the next step to develop this project. Genoil needs to obtain suitable project financing to complete this project”, stated Mr. Thomas Bugg, the Corporation’s new President and Director.
A Genoil delegation is planning to be in Beijing in July to work on establishing a strategic partnership with the Chinese Financial Authorities to finance the Corporation’s merchant projects around the world and in China. Particular attention will be given to financing the HYT project for US$180 million. According to the Letter of Intent signed between HYT and Genoil, HYT will fund 20% of this project and 80% will be funded by Genoil through project finance. Genoil will be working to obtain this project finance as part of an overall strategic partnership with China.
China will become the largest user of energy in the world in the future, and is intent on securing oil resources and technologies that will aid in supplying the energy that it will need. China has entered into many strategic partnerships to secure this energy supply and Genoil wishes to become one of these strategic partners by supplying China with the GHU® technology that can convert its heavy oil resources into light oil.
At present there are around 76 million barrels of light oil being produced every day from a base of approximately 400 billion barrels of light oil in the world, while only about 9 million barrels a day of heavy oil are being produced from a worldwide base of 900 billion barrels of heavy oil. It is from the heavy oil conversion that the supply of oil will come from to meet world demand for gasoline, jet fuel and diesel. Thus, it is vitally important to China to initiate heavy oil conversions in the country and around the world to meet its growing demand.
Once the project funding is secured, Genoil will hand the design to the EPC contractor to complete the detailed design, to procure all the parts and oversee the construction of the plant. Genoil engineers will supervise this process. The Corporation expects to be spending some months meeting interested parties and negotiating many aspects of the deal. During this process, the Corporation will also be hiring a project manager that will work closely with our engineers, HYT and our EPC contractor in China.
As announced in a previous investors update, the estimated capital costs of the overall upgrader is currently 1.26 billion RMB (US$180 million), which has been well received by HYT. The Corporation’s analysis had shown that the rate of return per year on this project, when completed, should remain considerable. This is despite the Chinese control over sales prices of products, such as the ones produced by Genoil’s technology, which has just recently been increased.
The second area of focus for the Corporation is currently to build a 1,000 bpd demonstration plant. Genoil has previously announced the purchase of an upgrader unit that must be retrofitted with its GHU® technology, and is looking for a location in North America to build this facility. Genoil will search locations in Canada which provide tax incentives, as well as in the GulfCoast where a number of existing refineries are concentrated. Genoil is in early discussions with one heavy oil field operator in Texas for using such a retrofitted unit in his field.
Genoil is continuing its efforts to cut costs to gain profitability. In this regard, Genoil has substantially reduced its overhead. At the same time, it has moved its manufacturing of oil-water separation equipment to Romania at a 50% discount. Savings have been passed onto its potential customers with a 40% discount from previously listed prices and 50% discount for five or more units. The market reception to these price cuts has been enthusiastic and many openings for business have been presented. The Company hopes that by severely cutting its overhead burn rate per month, and selling a large volume of discounted oil-water separation equipment, it will become profitable in the near future.
Mr. Bugg said: “At Genoil we are concentrating on our present projects, but we are also going to be implementing different approaches and tactics than the company has followed in the past to make this Company very successful. This will include acquisitions, joint ventures, technologies purchase and revenue sharing with different organizations. Of course such transactions will be based on augmenting the existing technologies that the company already has. It is important that the company remains focused on these technologies, but starts generating significant revenue by utilizing different strategies over the next few months. We will be flexible. I have many ideas which I am exploring with the Board of Directors, management team and our sales department. It is my goal to build Genoil using similar techniques that I used to build Beau Canada from scratch into a company that had an enterprise value of over 750 million dollars.”
Genoil is an international engineering technology development company based in Alberta, Canada that develops innovative hydrocarbon, oil and water separation, and marine technologies.
For more information contact:
+1 (403) 750 – 3450