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| LUKOIL |
In August 2004, Lukoil-Komi LLC, a wholly-owned subsidiary of OAO Lukoil, based in the Republic of Komi, Russian Federation, approached Genoil expressing interest in constructing a field hydroconversion unit at its Yarega deposit. Initial interest was shortly followed by a request to conduct a series of tests on its heavy crude from the Yarega deposit using the GHU®. For that purpose, Lukoil-Komi shipped 150 barrels of Yarega sour, heavy crude to Two Hills, Alberta.
Upon completion of the tests, the management of Lukoil-Komi was presented with an extensive report describing results of the tests and their operational conditions. A full crude assay was conducted by an independent laboratory using the sample collected before, during and after processing their crude in the Genoil Two Hills pilot facility, and the results exceeded the specifications set forth by Lukoil-Komi. Genoil's engineers, in collaboration with engineers at Stantec, provided Lukoil-Komi with a pre-feasibility study that included a cost estimate for the proposed plant and a description of its configuration and the scope of supply.
Since then, Genoil’s management has had several detailed and serious discussions with representatives of Lukoil. In October 2006, Genoil submitted a full commercial proposal for a 60,000 bpd facility for review by Lukoil-Komi and their parent company and is now waiting for a response from Lukoil on a clear path forward.
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