Oil Refineries to invest $400m in going green

Moshe Kaplinsky / Photo: Jonathan Bloom , Globes
Moshe Kaplinsky / Photo: Jonathan Bloom , Globes

The company plans a nationwide network of hydrogen fuel stations. CEO Moshe Kaplinsky: The future of transport lies in hydrogen.

After a 50% decline in its market cap in the past three years, Oil Refineries Ltd. (TASE:ORL) (Bazan) plans to become a leading supplier of renewable energy for transport and of advanced polymers. At an investor conference today in Tel Aviv, the company presented it targets for the period up to 2030, headed by expansion of its hydrogen production capacity, nationwide deployment of hydrogen fuel stations, and production of 30% of its total polymers output in the form of "green" polymers.

To implement its strategic plan, Oil Refineries will invest $1.5 billion in capital expenditure up to 2030, of which at least $400 million will be in its new growth engines. The rest will be invested in continued improvement and adaptation of existing assets, and implementation of advanced technologies to reduce the company's carbon footprint.

Outgoing Oil Refineries chairperson Ovadia Eli said at the conference, "The Oil Refineries group will continue to be a vital industry for the State of Israel in every respect: security, economic, and environmental. The new strategic plan will turn Haifa Bay into a leading center of development and promotion of clean fuels, and will at the same time ensure functional continuity in the economy."

Oil Refineries CEO Moshe Kaplinsky, who will replace Eli as chairperson, said, "Oil Refineries intends in the coming years to turn from a company that produces refined products and polymers from oil into a leading supplier of renewable energy for transport, and advanced polymers. Today, Oil Refineries is presenting a clear vision of its future.

"We shall lead the green hydrogen and alternative fuels market for transport in Israel and in the Mediterranean basin, we shall lead the advanced polymers and bio-polymers market, and we shall leverage our activity in Western Europe, all this at the same time as continuing to lead in fuels as required by the economy."

The person charged with carrying out the plan will be Kaplinsky's replacement as CEO, Malachi Alper, who was formerly CEO of the rival oil refinery in Ashdod.

Referring to the decision by the committee of directors general of government ministries that the petrochemicals industry in the Haifa Bay area should be shut down within a decade, Kaplinsky said, "If we analyze the conclusions of the directors general committee, we see an awakening and development. When we examine the recommendations in depth, we see that there is understanding. They talk about the strategic importance and functional importance of the fuel economy, and so before the oil refinery is shut down, alternative infrastructure has to be created.

"The country needs to become ready, and that will take time. They talk of a decade; I think it will take longer. The directors general committee understands that the way to solve the problem is the way accepted around the world, which is to coordinate with the industry. The committee understands that we are not the problem but the solution. We know how to make changes and create value."

On transport, Kaplinsky said, "We believe that the future of transport lies in hydrogen. Cars will be electric, but all the heavy vehicles will use fuel cells, that is, hydrogen, and we intend to be there. I believe that from 2025, hydrogen-fueled trucks will be competitive, and that from 2028 they will be cheaper than diesel trucks.

"It’s too early to write off the fossil fuels market. We have not yet reached the peak of global fossil fuel sales. The peak will come between 2035 and 2040. These are the forecasts, and the implication is that we must continue investing in what we do today, and that also gives us time to prepare. We shall do everything with deep commitment to ESG."

Published by Globes, Israel business news - en.globes.co.il - on July 22, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Moshe Kaplinsky / Photo: Jonathan Bloom , Globes
Moshe Kaplinsky / Photo: Jonathan Bloom , Globes
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