? GDiesel is a product with low cost of production, comfortable commercial margin and high performance efficiency.

The Market

Competitive Advantage

The GDiesel® is a product with no analogue in the EU. It is characterized by low cost of production, comfortable commercial margin and high performance efficiency. KIEG's and ARC's numerous experiments and tests (with partner research institutes, SGS, and others) clearly indicate that application of the new Product increases the net economic benefit for end-users on average by 10–15 %.

Potential customers for the GDiesel® are:

– wholesale and retail oil product traders;
– major automobile transport companies;
– unmanned fuel stations (typically independent from the big chains) increasing in popularity;
– large ports and shipping fleets;
– diesel-based railroad transport;


Leading Market Players

All top market leaders (e.g. BP, Shell, OMV, Agip, Total...) offer their premium fuel products (e.g. V-Power, Ultimate, Suprime...). Pricewise they are all positioned at the tip of the range with a typical mark up of around 10 % as opposed to regular fuel. All these fuels come from the same "pipe" (i.e. refineries); however, each brand has its own additives recipe. Based on its energy efficiency and environmental parameters the GDiesel® is a superior product, which bears no additives (and their associated cost).

Furthermore, following the introduction of the new Euro-6 standard (CO2 emissions of up to 120 g/km) in the EU all member states should abandon sales, registration and approval of vehicles that do not meet the new standards (except for vehicles that meet approved social needs and categories N1 and N2). On part of the automobile manufacturers, the Euro-6 certificate requires introduction of improved new technologies (e.g. engines, filters, recycling) all of which require serious investment expense.

This problem can also be addressed by the diesel producers, i.e. the refineries. However, currently existing technological solutions are costly, and related expenses will need to be either transferred to the end-users or will need to be mitigated by governments and/or the EU budget (e.g. tax breaks and alike incentives).

The Project's technological solution, via patented technology for the production of the GDiesel® brand, proposes to solve the problems of regional consumers, related to the introduction of the new Euro-6 standard in the Czech Republic as a first step, before expanding in the rest of the EU. With its modest investment requirement and short-term payback the Project offers undeniable competitive advantage.

EU Market

The EU are beginning to introduce the new environmental standard Euro-6 starting in 2015. Standard Euro 6 imposes strict limits on the emissions of NOx and particulates. Some car manufacturers have already announced that this will be the beginning of the end of the "diesel era" in Europe, because to produce diesel engines that are adapted to the requirements of the new standards will be more expensive than comparable gasoline engines. The companies Ford and Toyota have already estimated that the move would reduce sales of new diesel vehicles, resulting in decline for diesel fuel demand in Europe eventually. As a result, this could even lead to reduction in existing refining capacity. (Although, European governments may decide to stimulate demand for diesel engines by offering tax incentives.)

Currently, 50 % of new vehicles sold in the UK are equipped with diesel engines. In Spain and France, this figure is even higher – more than 70 %. The average number of vehicles with diesel engines in the European Union now stands at 55 %. In the EU today, only the registered cars annually consume over 200 million tons of diesel fuel. According to the specialized consultancy Wood Mackenzie (the global energy, metals and mining research and consultancy group) at current levels of consumption and due to underinvestment in the diesel sector, a potential deficit of up to 50 million tons per year is expected to emerge in the EU within a decade.

At the same time in the United States and Japan, the share of passenger cars with diesel engines does not exceed 10 %. Such a situation has developed in Europe largely due to tax incentives for the purchase of diesel cars, which are available in some EU countries. However, this may change. The diesel engine dominance in Europe's automotive market could end later this decade due to the higher cost of production associated with the Euro-6 environmental standard.

In order to fulfill the environmental requirements of this new standard regarding emissions, a new generation of clean technology must apply. The proposed ClearRefining technology and the associated design larger scale plants based on it, will help address these issues.

The Czech Market

The end of 2014 was a time of a sharp drop in oil prices. Accordingly, this is reflected in the cost of petroleum products, and in particular the cost of diesel fuel. This situation is favorable to the Project, since it significantly reduced the cost of the GDiesel® Product. The price of diesel fuel (quoted at Platts-Rotterdam) between September 2014 to December 2014 fell by 33 %, while the wholesale and retail price in the Czech Republic only fell by 10 %. Diesel price reduction in the wholesale and retail market is constrained by previous purchases, by major players in the market, at higher prices. In the future, if the price of oil and petroleum products respectively remain the same or rise (in the wholesale and retail market) the opposite situation may be observed. In such a reversed scenario, it will be beneficial for the Project to raise more working capital in order to build raw material stock (e.g. for up to six months).

World Market

For the last 10 years diesel has been the alternative fuel to refiners worldwide. Demand did not always meet the growing supply. According to the pricing agency Platts, swaps of lowsulfur diesel in northwest Europe during the 1st quarter of 2014 decreased against futures for the supply of gas-oil with a sulfur content of 0.1 % (Exchange ICE) and amounted to an additional US$ 17/ton on CIF (cost, insurance, freight) terms at the port of Rotterdam. This is the minimum level recorded since 2013. Revenues from other sales in the low-sulfur diesel fuel swaps in 2014 remained low, as refineries ramped up production of fuel to complete the autumn routine maintenance works, according to the Platts agency. At the same time, in November 2014 the spot premium (for the last 6 weeks) declined by 48% to an annual minimum of US$ 10.5/ton. The value was down US$ 28.75/ton compared to the same period in 2012. The market situation has changed dramatically. Earlier during the period of seasonal maintenance work at the refineries, the price (for low-sulfur diesel fuel) was about US$ 40 and even US$ 50/ton. Reduced premiums for diesel fuel in the European market contribute to rising fuel imports, mainly from the US, where refining margins are much higher than in Europe. According to traders, maintained fuel production in the United States in 2014 at current levels and commissioning of new refining capacity in the Middle East and China are the main factors in reducing premiums during 2014.

Market Potential

KIEG and ARC have conducted thorough research of the global potentially reachable market for the GDiesel® Product.

Key figures in the Global Diesel Market (MM/t/p.a.):

CountryOil Processing Capacity% DieselDiesel Volume

Estimated Market Potential for the GDiesel® Product with indications of the required number of ton per day/month and the number of plants capable of satisfying this potential demand:

CountryDiesel Volume Produced (MM/t/day)Diesel Volume Produced (MM/t/month)Number (*) of ClearRefining Units (Euro-6 standard)
Total 7985

* Note: the number of production plants required to meet the potential Product demand based on production capacity of 113 ton/day.

Only for the major diesel producer-countries, during the next three years of transition to the new stricter environmental standards (e.g. Euro-6) some 7985 ClearRefining Processor units will need to be produced involving investment to the tune of EUR 3.2 bn.