Benzinga | Jul 9, 2021 08:32AM EDT

Brooge Energy Announces Signing Of Agreement With Oil Trader To Produce IMO Compliant Very Low Sulphur Fuel Oil

Brooge Energy Ltd. ("Brooge Energy" or the "Company") (NASDAQ:BROG), a midstream oil storage and service provider strategically located outside the Strait of Hormuz, adjacent to the Port of Fujairah in the United Arab Emirates (the "UAE"), today announced that its wholly owned subsidiary, Brooge Petroleum and Gas Investment Company FZE ("BPGIC"), has signed a Refinery Agreement with an oil trading company for a 25,000 barrel per day ("bpd") modular refinery.

BPGIC will sublease land to the oil trading company, which will be responsible for constructing the refinery including bearing the full cost of construction. When construction is complete, BPGIC will be responsible for operating the refinery, earning revenue from tolling fees on a take-or-pay basis. The agreement between BPGIC and the oil trading company includes a tolling contract for a tenure of 20 years, consisting of a five-year contract to commence upon completion of the construction of the refinery, and three renewal periods of five years each.

Nicolaas L. Paardenkooper, CEO of Brooge Energy and BPGIC, said, "The modular refinery will be focused on producing Very Low Sulphur Fuel Oil ("VLSFO") and will be fully compliant with the new IMO 2020 very low sulphur rule. With the UAE adding to its oil production capacity, which we anticipate will drive demand for refining services for both the domestic and export market, we believe this is an opportune time to enter this segment of the oil industry. This agreement is a low-risk approach to advancing these plans as the oil trading partner will own the asset and take on the cost of construction and any oil price risk, while our focus remains in our area of expertise as the operator of the facility. This is expected to drive additional revenue to Brooge Energy, at favorable EBITDA margins."