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PetroNeft successfully tests mini refinery on licence 61
8th Oct 2020 15:39
(Sharecast News) - Russia-focussed oil and gas exploration and production company PetroNeft announced the successful testing of the mini oil refinery on licence 61 on Thursday, which it 50% owns and operates, ahead of schedule.
The AIM-traded firm reported the successful testing of the mini refinery processing unit on licence 61, and said regulatory approval was in process, expected to be in place by the first quarter of 2021.
PetroNeft said the project was set to "significantly reduce" operating expenditure.
The board explained that, in January, it began construction of a mini oil processing facility on licence 61 to eliminate the need to purchase the "significant volumes" of diesel fuel required for machinery and electricity generation at production facilities, especially during the winter months.
It said the project would reduce 2021 operating costs by more than $0.6m.
In addition, it said it would further improve its economics by enabling excess product to be sold on the local market at a "significant premium" to unrefined barrels.
Due to the oil price drop associated with the Covid outbreak, the project was paused in March to reduce costs and Covid exposure from subcontractors.
Once the market outlook started to improve in June, PetroNeft said it was able to continue the work using its own personnel.
Following the successful testing of the refinery unit, the next stage would be to receive final regulatory sanction, a process which could only be started once the plant is tested.
Certification was expected to be in place during the first quarter of 2021.
"This is a major success for the company," said chief executive officer David Sturt.
"The project will not only significantly reduce operating costs per barrel but also open up a new value-added revenue stream for excess product.
"We are particularly pleased by the fact that, in spite of delay caused by external factors, and the ongoing disruption caused by Covid-19, our team was able to complete the project without relying on outside contractors, which is a testament to their innovation, commitment and determination."
At 1054 BST, shares in PetroNeft Resources were up 23.84% at 0.77p.
The AIM-traded firm reported the successful testing of the mini refinery processing unit on licence 61, and said regulatory approval was in process, expected to be in place by the first quarter of 2021.
PetroNeft said the project was set to "significantly reduce" operating expenditure.
The board explained that, in January, it began construction of a mini oil processing facility on licence 61 to eliminate the need to purchase the "significant volumes" of diesel fuel required for machinery and electricity generation at production facilities, especially during the winter months.
It said the project would reduce 2021 operating costs by more than $0.6m.
In addition, it said it would further improve its economics by enabling excess product to be sold on the local market at a "significant premium" to unrefined barrels.
Due to the oil price drop associated with the Covid outbreak, the project was paused in March to reduce costs and Covid exposure from subcontractors.
Once the market outlook started to improve in June, PetroNeft said it was able to continue the work using its own personnel.
Following the successful testing of the refinery unit, the next stage would be to receive final regulatory sanction, a process which could only be started once the plant is tested.
Certification was expected to be in place during the first quarter of 2021.
"This is a major success for the company," said chief executive officer David Sturt.
"The project will not only significantly reduce operating costs per barrel but also open up a new value-added revenue stream for excess product.
"We are particularly pleased by the fact that, in spite of delay caused by external factors, and the ongoing disruption caused by Covid-19, our team was able to complete the project without relying on outside contractors, which is a testament to their innovation, commitment and determination."
At 1054 BST, shares in PetroNeft Resources were up 23.84% at 0.77p.