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Feasibility studies and valuations

Russia

Since Channoil's start-up in 1998, our consultants have carried out a considerable number of market studies and economic evaluations of prospective investments in a variety of downstream business sectors in support of a Russian major's global expansion strategy.

These investment opportunities have included refineries, oil terminals, service station networks and other marketing assets in the USA, Peru, Bulgaria, Ukraine and Canada.

Private client: Estonia

Channoil acted as the sole adviser to an independent company seeking to buy two large oil terminals. We conducted technical and operational due diligence in respect of the two oil business operations and we carried out a commercial valuation based on market and competitive factors. The work also included a detailed survey of the assets and the derivation of valuations based both on replacement cost less depreciation and on comparable market transactions.

Oil terminals: Latvia

We undertook valuations of three oil terminals for their three respective owners, who were considering sale or refinancing options. In each case this entailed assessing the asset's depreciated replacement cost, enterprise value and present market value using multiples based on recent regional transactions.

New storage terminal: Sultanate of Oman

A prominent Middle Eastern based oil supply and trading company asked Channoil to undertake a market study of a proposed new oil products and petrochemicals terminal in the Sultanate of Oman.

This entailed a detailed greenfield site development project extending from land use, terminal design and market and commercial feasibility to a full bankable business plan.

New storage terminal: Dubai

A trading company and an institutional investor commissioned Channoil to carry out a market study for a proposed new terminal to be located at Jebel Ali, Dubai.

Our work on this project followed a very similar pattern to that carried out in Oman, described above.

New storage terminal: Turkey

Channoil conducted a feasibility study for a prominent trading house on the development of a new liquids storage import/entrepot terminal in the vicinity of the Bosphorus Straits. This study evaluated the local import requirements for oil products and vegetable oils, and examined the potential for entrepot activities based on oil products arbitrage through and around the Turkish Straits.

New storage terminal: Rotterdam

A large US refining and trading company wanted to explore the opportunities for securing oil storage capacity for both light and heavy oil products in Rotterdam, as a basis for expanding its European trading activity.

Channoil undertook a market survey looking at trade flows, storage capacity and throughput volumes as well as at historical storage tariffs for a variety of business types. We also compared the available opportunities to rent, lease or build new capacity, carrying out financial modelling of each business case. Based on this, we made a series of recommendations and worked with the client in pursuit of potential investments.

European supply and logistics study

Channoil was commissioned by a major refiner and retailer to conduct a strategic review of its European refining, supply and logistics systems to assess, from a strategic perspective, their suitability to meet the business needs of the company in 20 years. The study covered the supply of oil products to its inland marketing networks in mainland Europe.

Among the key features of the assignment were a review of refinery capacity, the project's economics and suitability for the 20-year grown scenario, and the cost-effectiveness of supply and logistics systems across the entire value-chain.

New storage terminal: Spain

Two oil trading companies, which were in a joint venture to develop an oil storage terminal to meet local bunker requirements and act as a trading base for middle distillates and gasoline, called Channoil in to help with a study of the project.

Our task was to determine the potential size of the market and analyse the trade flows and arbitrage opportunities. In addition, we prepared financial case studies and made presentations to the clients on the project's feasibility, as well as advising on financing arrangements.

Business evaluation: Fujairah, UAE

Acting for a national oil company, Channoil carried out a feasibility study of the scope for expanding its fuel oil storage capacity and establishing a new bunker fuels supply business at Fujairah.

The study included an assessment of the medium-term demand for international bunker fuels in the Fujairah area and an estimate of the likely market share and trading margins. We also provided capital and operating cost estimates and undertook economic modelling to arrive at an expected NPV for the project.

Business evaluation: Northern UAE

A national oil company and an international trading company were planning to form a new joint venture to handle the importing and marketing of bulk bitumen into the Northern UAE market and asked Channoil to carry out a feasibility study covering:

Refinery relocation: Dubai

A very prominent trading house was interested in acquiring a closed refinery in the UK, dismantling it and re-erecting in in Dubai. Channoil was bought in to undertake a detailed study covering:

Oil terminal valuation: Turkey

The International Finance Corporation (IFC) has an equity interest in an oil terminal in Turkey. The terminal's storage capacity had recently been expanded but further capital investment was needed to improve the oil tanker moorings so that they could accommodate the larger vessels required to take advantage of international trading arbitrage opportunities.

Channoil was invited by the IFC to provide an independent assessment of the future market and business potential for the terminal.

Crude oil pipeline commercialisation: Ukraine

Working with a lead adviser, Channoil prepared a business plan for a Ukrainian state company, for the commercialisation of the Odessa-Brody pipeline. The plan proposed using the pipeline as a major trunk system to supply Caspian and Russian crude oils, delivered by sea to terminal storage at Pivdenny on the Black Sea coast, to Central and Western European refiners, thus bypassing the environmentally sensitive Turkish Straits.

To implement the business plan, Channoil led the negotiation with potential users, pipeline companies and refiners of the contracts for storing and transporting the oil. The project also entailed conducting an in-depth supply and demand analysis to establish short- and long-term future pipeline flows for sweet and sour crude oils into Central and Western Europe. As part of this process, we organised and attended industry forums and held detailed discussions with many large crude oil producers, European refiners and national oil pipeline companies, as well as with the EU, the US and the local governments concerned.

Refinery pre-feasibility study: Georgia

Channoil conducted a pre-feasibility study for the construction of a new oil refinery at Batumi on the Black Sea for one of the owners of an existing terminal. Key elements in the study were assessments of crude supply channels, product markets and specifications, and margins.

Refinery feasibility study: Mongolia

Channoil carried out a high-level design and economic feasibility study for a potential investor, examining the potential for a 50,000 b/d refinery at Sainshand in Mongolia.

Our work included a 10-year forward demand study for gasoline, diesel and aviation kerosene in Mongolia and a review of the marketing channels for those products. We also looked at feedstock options, road and rail supply routes from China, and manpower needs and operating costs; and we built an economic model to help assess the project's financial return under various scenarios.

Bitumen plant feasibility study: UAE

Channoil was engaged to conduct a detailed study to assess the feasibility of constructing a bitumen manufacturing facility in the UAE. This eight-month project, which included our technical partner, encompassed the following main elements:

Because of the complexity of the project and its geographic spread between Europe and different parts of the Middle East, a key task for Channoil was to facilitate communications between all those involved. This was accomplished by running a series of participative workshops.

 

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