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02-28-2007
Vijay Goradia presents a paper at the Chemweek conference
in Dubai...
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04-17-06
Vinmar establishes a dedicated Fuel Component and Aromatics Business Unit....
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03-17-06
Vinmar signs off-take agreement for BDO with GACIC....
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| "Making Petrochemical Projects Happen Through Long-term Product Off-take" |
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| Petrochemical Project Development: |
Vinmar Projects is primarily the project development arm of Vinmar for the petrochemical projects worldwide. It assists the potential project developers for realization of the projects from concept to completion.
Vinmar Projects knows what the global market demands and what supply patterns are prevalent for various petrochemical products. It offers advice on putting together a plant configuration that makes the most sense from the point of view of marketability, technology and economics. Next, Vinmar Projects assists the developers to realize their financial close by selection of technologies, EPC and PMC companies, feedstock supply companies and Operations & Maintenance (O&M) groups, as required. Finally, Vinmar provides the long-term off-take support and stands alongside the developer to secure debt portion of financing through project finance from bilateral or multilateral financing institutions. This brings the project to an accelerated financial close.
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| Grassroots Petrochemical Projects and Long-term Off-take: |
Vinmar Projects provides a valuable service to the developers and sponsors of new petrochemical projects worldwide. It makes the petrochemical projects happen through long-term product off-take. The term of the off-take agreement is usually equal to or longer than the term of the loan, i.e., a "term plus tail" approach. This provides comfort to the lenders with regard to their debt service and makes the lending process go forward more expeditiously.
Vinmar has implemented this model on a large number of projects worldwide. During the development phase of the project, Vinmar Projects works very closely with all members of the so-called "project community" consisting of project developers, sponsors, investors, financing institutions (such as commercial banks, multilateral financial institutions and export credit agencies etc.), process technology licensors, EPC and PMC companies, market consulting organizations, feedstock suppliers and operation & maintenance (O&M) organizations. Before approaching the lending institutions, Vinmar signs a long-term product off-take agreement and it is submitted along with Project Information Memorandum (PIM) and with the so-called security package consisting of various agreements to the lenders.
The development phase culminates with the financial close of the project.
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Brownfield Petrochemical Projects and Product Off-take: |
Vinmar is equally interested in the development of so-called “brownfield” projects. These projects may include capacity expansion through installation of additional conversion capacity, or through plant de-bottlenecking or revamp. It may also involve technology upgrades. These plant modifications may need fresh infusion of capital or debt financing.
Vinmar Projects has considerable experience in supporting such projects and a quick turnaround to bring projects on line in the shortest possible time. Again, Vinmar long-term product off-take agreement will result in a fast financial closing and implementation.
These are so-called “Special Projects” to which Vinmar Projects pays special attention because of their quicker completion cycle.
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| Customer Development: |
During the project execution phase, i.e. Engineering-Procurement-construction (EPC), Vinmar Projects carries out market seeding and actual customer development. Vinmar does a very thorough survey of the merchant market base around the world and looks for opportunities where it may assist the existing or new customers to establish additional captive use or conversion facilities. Occasionally, Vinmar Projects will arrange financing to assist the potential customers add new capital assets. This requires commitment of manpower resources and financing to develop such loyal customer base. Consequently, such customers will be ready and waiting to receive the product on long term and sustainable basis once the commercial production starts.
This kind of investment of resources requires that the size of the off-take quantity be large enough and the term of the off-take long enough to yield economy of scale for the off-take.
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| Product Long-term Off-take Model: |
Vinmar Projects long-term off-take model has twin objectives:
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(a) To place all of the product that can be produced from the production assets. Having invested the capital, it does not make sense to operate the assets at less than nameplate capacity.
(b) To earn the best net-backs on the placement of product under the then prevailing market conditions.
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| During the implementation stage, Vinmar Projects assigns an Implementation Manager to assist and liaise with the marketing team assigned by Vinmar International. |
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