A Push for Partial Refining to Boost Profits

Q: What is Genoil’s contribution to the oil and gas industry?

A: Since its start, the company has turned more toward technologies developed around the oil and gas industries in Canada, with its heavy oil tar sands. Among those are technologies regarding oil upgrading to increase API degree levels and reduce sulfur and impurities through the use of hydrogen. This technology is called hydroconversion, which is a process for improving the quality of oil by adding hydrogen. We also have oil and water separation technologies, some of which are applicable to marine environments. Moreover, we have been working closely with global, particularly Asian, development banks to identify and develop new sources of crude oil. Therefore, we are also focused on identifying and developing crude oil fields around the world. Genoil is not exploring for new oil fields but rather, it takes assets where people know what is in the ground and helps finance the development of those assets. This policy bank we are allied with is working to grow total world oil production. Therefore, we work in different regions of the world to identify oil fields that make sense for investment, to find partners and organize consortiums of global companies from different parts of the world to work together and develop such assets.

Q: What technologies does Genoil see itself applying in Mexico?

A: The main focus of the company is implementing our patented hydroconversion process in both the upstream and downstream sectors. In the case of downstream, we would be implementing the hydroconversion process at refineries, which would allow them to handle heavier crude, more sour crude and also to implement the technology in the field. The concept we are pushing is partial refining. Mexico produces 1.2 million barrels per day that is sour or heavy crude, which could be turned into light or sweet crude to create a profit margin that PEMEX could benefit from. The idea is to make a better-quality oil for export, so the oil itself is more desired by refineries around the world, thereby allowing PEMEX or the Mexican government to capture a partial refining spread. We have financing in place as well as strategic partners that are supporting this goal. For example, we have alliances with oil field service companies, such as Grupo Roales. Coming into a new market like Mexico you have to really be careful that your local partner is the right one. Therefore, we have already approached PEMEX because we feel that the best way to test the quality of your partners is to make an initial approach directly, without our local partner, and get a sense of the local market. We have done that and I feel very confident about our relationship with Grupo Roales.

Q: How has the economic situation in the oil industry impacted Genoil and its products and services?

A: The last few years have produced historically low prices. That has put many of the national oil companies under a lot of pressure. Many NOCs have slowed their spending on drilling and have cut back on capital expenditures. They are focusing on upstream assets with much lower production costs. With tighter budgets in this market climate they have been cutting back spending. This climate has not been ideal for upstream desulfurization technologies like the GHU hydroconversion technology. Even though it has a low cost compared to other upgrading processes, it nevertheless requires a great deal of CAPEX. We have been partnering with development banks to discuss proposals in which we help get funding for the projects of the national oil companies.

Q: Where does Mexico fit into your global strategy?

A: Mexico is one of the priorities of our global strategy; it is very close to home and we like to see our neighbors do well and to promote relationships between states. Mexico is a personal priority for us. We have an excellent team here and that gives me a lot of confidence. When I assess potential markets, I look at the value of the people we will be working with. Here in Mexico we have the best team. We are very fortunate to have the kind of connections that Grupo Roales has brought.