Purchase Of An Oil Trading Company
A European Metals and Minerals Company wished to expand its business into oil trading and asked ROST to find a suitable company for purchase or merger. ROST International Trading Limited provided a short list of companies and carried out a due diligence exercise on one of them and made an assessment of the company accounts. ROST produced a report detailing the physical and contractual assets of the Company together with an assessment as to the capabilities of the senior management and staff. Recommendations were made as to how value could be added to the Company by the acquisition of infrastructure, and by the availability of further funding for trade finance and asset purchase. ROST were offered the possibility of managing the assets of the Company if the purchase proceeded. ROST took a leading role in the discussions between the parties although the planned purchase did not proceed due to the withdrawal of one of the parties.
Construction Of An Oil Terminal In A Hazardous Middle Eastern Country
A Commodity Trading Company expressed a desire to acquire oil related infrastructure advising that it had the capacity for a high risk strategy if it could be demonstrated that high returns were possible. ROST explained that through their contacts at Lloyds of London it was possible to offset terrorism and political risks in certain countries by taking out comprehensive insurance policies, which although expensive could mitigate the risks involved.
ROST recommended the construction of a bespoke gasoil blending terminal, which could take advantage of the local high demand for low sulphur diesel by purchasing locally available high sulphur products and blending them to meet the required specification using new technology unknown to the various competitors. Although situated in a war zone ROST International Trading Limited obtained comprehensive insurance to cover most of the risks involved and at the same time produced a risk analysis of operating in the country concerned. ROST provided the Company with an initial “Teaser” document to allow them to make the decision to investigate the project in detail. Later ROST produced a detailed analysis of the local petroleum products market, a competitor analysis, a risk analysis and a cost benefit analysis of building the terminal.
Using their experience working in challenging countries like Afghanistan, ROST produced initial engineering designs and a cost estimate of the construction showing how war and terrorism risk could be modified by careful construction planning. ROST International Trading Limited produced a draft EPC contract and a draft tender document to enable the contractors to bid for the construction.
Purchase & Upgrade Of Redundant Mini Oil Refineries In A Hazardous Country In The Middle East
Working for the same Company mentioned above, ROST recommended the purchase of one or more redundant mini oil refineries. Although situated in a war zone the refineries were fundamentally sound, but not operating as they were loss making. ROST wrote a paper explaining the reason the refineries were not working was that they were simple topping units and uneconomic, but with investment in additional units could be brought on stream and run at a profit.
A “teaser” document was prepared by ROST containing preliminary market and cost data to enable the Company to review the project. After review ROST was requested to report on the local crude and petroleum market with a competitor analysis and an estimate of the market share that could be achieved by the upgraded refinery. As part of this report ROST wrote a report on logistics and the various factors affecting the local and export market. An analysis was made as to the trucking capabilities of the various contractors as their co-operation would be critical and in addition the possibility of acquiring additional trucks by cash purchase and importation from abroad. The refinery was surveyed by ROST and a report produced to show the current status of the refinery including estimated yields and losses for the available crudes. In addition recommendations were made for the purchase of additional units, blending equipment and tankage on a phased basis, so that yields could be improved so that capital costs could be paid out of extra profits over two years. As the refinery was in a war zone, ROST using their contacts at Lloyds, secured various insurances designed to mitigate operating risks and various design factors were incorporated into the design plans with the reduction of insurance premium costs in mind. ROST sourced contractors on behalf of the Company to manage and operate the refinery, supply and engineer the additional equipment and to operate the trucks. Working with solicitors, ROST drafted and ensured all contracts were suitably worded to protect the Companies interests and risks were mitigated at all times. ROST identified a further three redundant refineries for possible upgrade and purchase.
Purchase Of Mini Refineries In Central Asia
ROST introduced the trading arm of a major foreign Bank to some mini refinery owners in Central Asia with a view to the Bank purchasing the refineries. ROST carried out preliminary technical, logistical and economic studies in order to produce a “Teaser” document for the Bank to assess the project and arranged meetings with the refinery owners for preliminary discussions. Following successful discussions ROST carried out a number of studies including a technical appraisal of the refineries capabilities for various crude feedstocks in order to calculate yields and losses of the various crude slates. A cost benefit analysis of using the various crudes was carried out including a detailed analysis of the supply chain logistics and economics, a detailed risk analysis of the various supply chains and a study of the economic benefits of blending the crudes and how this might technically be achieved. Included in the risk analysis was an assessment of the insured risks and non-insurable risks with suggestions as to how such risks could be minimised.
At the same time an assessment of the existing market for petroleum products was carried out for the region and an impact study as to the effect of the market share that could be obtained by purchasing the refineries. The study also looked at the added value that further blending of refinery produced products with additives and other imported products could be obtained and a further study was carried out looking at the export possibility of refined products. One final investigation was carried out looking at the possibility of further investment into secondary refinery units and how this would affect the refinery economics.
ROST carried out a detailed survey of the refineries, infrastructure, and existing management processes and produced a fully costed detailed management plan for future operations including processes for taking over the refineries, starting operations and managing them on an ongoing basis. At this stage ROST produced a detailed and costed insurance plan together with a final risk management plan.
Following the production of the above mentioned reports ROST produced a detailed document for the Bank to enable them to carry out a detailed analysis of the entire project. ROST then introduced the Bank to the refinery owners and made recommendations as the various ways the refinery contracts could be drafted and made suggestions as to how added value could be obtained by different contractual approaches.
ROST then sourced new management and staff to run the refinery and drafted all the refinery operating procedures including security, ethics, health and safety, spares and maintenance, operating procedures and HR procedures. ROST International Trading Limited drafted refinery terms and conditions for the purchase and sale of crude and products, draft purchase and sales contracts, draft contractor agreements and draft consultancy agreements. ROST also drafted detailed operating procedures for the control of all financial matters, information flow, management controls including reporting and audit processes.
Acquisition Of Oil Wells & A Mini Refinery In Central Asia
A Commodity Trading Company asked ROST to find new investments in oil related infrastructure for them to purchase with a view to setting up a joint venture with ROST to operate the assets on behalf of the Company. They explained they were looking to purchase businesses that were currently not operating efficiently and needed additional funding and management expertise to make them successful. They further asked ROST to manage the businesses on their behalf and to enter into a joint venture with them.
ROST introduced them to an oil producer in Central Asia that had crude oil production facilities but was under capitalised and a second company nearby that owed a mini oil refinery that was not operating through lack of crude oil availability. ROST then carried our due diligence investigations on the Companies, their assets and the possibility of a foreign company operating in the country.
In addition to the above ROST was asked to investigate the possibility of purchasing local indigenous crude sources direct. A visit was made to three of the production wells and a detailed report was made of the production facilities, available well data and likely investment required to continue and expand production together with a risk analysis. A further study was carried out investigating the logistics of trucking the crude to the refineries or railing it for export and the various costs and benefits, together with a comprehensive report on the status of the refinery(s) and the local petroleum products market.