Oil Refineries Ltd. (TASE:ORL) today announced a $1.1 billion strategic plan, under its new owners, a consortium of Israel Corp. (TASE: ILCO) and Israel Petrochemical Enterprises Ltd. (TASE:PTCH).
Oil Refineries plans to enhance current assets in its refining business by investing in them in order to maximize value, even when margins decline. It also hopes to identify global expansion opportunities; expand petrochemical activities in Israel and globally, with a focus on specialty products with high added-value; and develop complementary fields, such as electricity production, international trade activities, and fuel and chemical transportation activities.
Oil Refineries said that it would invest $850 million in expanding its business in both the core and complementary activities, and invest $270 million in the environment, safety, security, production reliability, and product quality control.
A breakdown of some major investments include $600 million in the refining process (hydrocracking) of which $116 million has already been approved. This project is due to be completed in 2011. The company is also investing $140 million to increase operating flexibility and efficiency, $50 million to upgrade the major refining unit and $110 million in electricity production
On the environmental side, Oil Refineries plans to apply the Euro V Fuel and Diesel standards of 10 parts per million (ppm) sulfur content, a fifth of the current level, to market heating gas oil with 0.1% sulfur content beginning in January 2008, and combine biodiesel in the company's products. The aim is to reduce ammonia, BOD (biochemical oxygen demand), sulfur dioxide, nitrogen oxide, particle, metals, and mineral oil emissions. The company notes that it has installed a wastewater treatment system and is in compliance with Ministry of the Environment standards.
On the financial side, the company plans to institute a new performance-based compensation plan and has issued a draft prospectus to raise hundreds of millions of shekels in bonds. The company plans to approach both Israeli and foreign banks and capital markets to finance its expansion plans.
Published by Globes [online], Israel business news - www.globes-online.com - on November 7, 2007
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