La Mède Complex project gains steam with Total now on board
La Mède Complex project gains steam with Total now on boardLATEST
Ecoslops Provence is currently building a slops refining unit to regenerate oil residues at Total’s La Mède complex in the port of Marseille. As part of the agreement, Ecoslops SA announced that Total will acquire a 25% interest in Ecoslops Provence, the affiliate in charge of the project.
FACT
Ecoslops Provence is building a slops refining unit to regenerate oil residues at Total’s La Mède complex. The new facility with a nominal processing capacity of 130t/day is scheduled to begin operations in late 2019 and supply Total with naphtha oil.
As part of the agreement, Ecoslops SA will also give Total a 25% interest in its affiliate Ecoslops Provence. While Ecoslops will operate the unit, Total will supply all necessary services and utilities.
Financing: the facility is financed by directed loans from the EIB (€18m), a loan from three banks totaling €6.5m as well as a zero interest loan from the PACA region.
ANALYSIS
With Total’s acquired stake in Ecoslops Provence, the announcement sends another positive sign regarding the prospects for this second refining unit and serves as an indication that Total has full confidence on its partnership with Ecoslops and its benefits in terms of the carbon externalities reduction that can be achieved through Ecoslops’ technology. As Big Oil is desperately looking for offsets to their Scope 3 carbon footprint, La Mède type operations, although tiny on Total’s scale, cannot hurt as this is avoided carbon.
The announcement is positive from a financing, as well as a valuation standpoint, and since Total is also providing access to existing infrastructure and services at the La Mède complex, this will certainly lower set-up costs for the refining unit and facilitate its entry into operation.
IMPACT
No financial impact as we assume that Total participates at cost. The valuation should benefit in terms of risk reduction. This will be allowed for when Ecoslops releases its results (04/04/2019).
Ecoslops SA. Ecoslops SA is a France-based company principally engaged in the converting pertroleum residues from shipping (slops and sludge) in new marine fuels recycled. The Company offers seaports, residues collectors, ship-owners and bunker suppliers with a technology to recycle oily waste of ships. Ecoslops SA is active in promoting the development of the P2R unit by its incorporation in a more global plant: Oil Waste Processing Plant (OW2P). The OW2P technology combines a refining petroleum process (P2R) with appropriate clean water. The Company recycles the waste in order to be used in electricity production and steam production among others. The Company's fuel production is located in the port of Sines, Portugal.
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