AlphaValue Corporate Services Fundamental Analysis FR
Back to
AlphaValue Corporate Services
This research has been commissioned and paid for by the company and is deemed to constitute an acceptable minor non-monetary benefit as defined in MiFID II


Bloomberg   ALESA FP
Other Energies  /  France  Web Site   |   Investors Relation
The cleantech making oil residues green
Businesses & Trends

Ecoslops renews oil residues from shipping (slops and sludge), turning them into fuels through its unique technology.

Technically a refiner, Ecoslops is attractive as its very processes amount to cleaning up efforts of oil related waste and overall lowering of carbon emissions. It is its business model paradox.

Ecoslops operates its first industrial scale treatment unit (nominal capacity of over 30kt of recycled fuel) in the port of Sinès, Portugal.

Within the Sines operating success, Ecoslops improved its refining process and, at fixed oil price and capacity, Marseille La Mède is expecting an EBITDA improvement of a 1/3rd compared to Sines and it will be even more for future plants.

The Petroleum Residue Recycling (P2R) unit: the company’s innovation lies in combining advanced refining techniques within a small processing plant, compared to typical refineries. P2R technology, coupled with ad hoc engineering, permits the renewal of slops.

1) Slops market
1.a. What slops are:
  • sludges: a waste from the purification of fuels in engine rooms (80% of hydrocarbons);
  • bilge water: a mixture of fuel oil, seawater, freshwater, cooling water, oil leaks and lube oils (10% of hydrocarbons);
  • slops: ballast water used in older tankers to stabilise the ship by replacing oil when they don’t carry payload; also, tank-washing water (20% of hydrocarbons). Furthermore, refineries and pipelines are also a source of slops.

The world fleet generates more than 100m tons of oil residues. These wastes are rich in residues and heavy metals and therefore represent an environmental challenge.

The International Convention MARPOL 73/78, which forbids dumping, led to establishing waste collection capabilities in the ports. However, a number of ports are still not compliant and unequipped. Most of the time, slops are resold on the cheap for combustion (e.g. to cement plants and steel mills).

Ecoslops’ process starts by separating water from sediments and hydrocarbons. Water undergoes conventional processing and is released. Hydrocarbons go through vacuum distillation at high temperature: the process yields c. 65% of fuels (in Sines’ instance) and 35% of light bitumen.

Source: Company

1.b. Slops, products and the oil price

Traditionally, slops were decanted by collectors and the hydrocarbons were bought as fuel by industries such as cement plants and steel mills. However, the low oil prices have driven buyers to consume virgin, purer fuels (i.e. products free of heavy metal sediments, sulphur, etc.), which imply lower pollution processing costs and hence prove more convenient overall.

As a result, collectors have lost their traditional outlet. The stocks of slops are building up in ports, testing the limits of storage infrastructures. Ships cannot discharge and collection fees are on the rise.

Slops prices have a non-linear relation to oil, where the sensitivity varies depending on the price level. When crude price is high (say Brent above $80/bbl), slops are considered as a competitive fuel by cement and steel plants, as the costs to reduce pollution from the dirty feedstock are justified by saving on price vs. cleaner, more expensive fuels (mainly refined oil products). Hence, crude and slops prices are more closely correlated.

At lower oil prices (e.g. at $45/bbl) alternative, cleaner fuels are more attractive to the energy-demanding industries, and slops stocks tend to accumulate due to a reduced number of economically viable disposal options. At the same time, the price of slops is less sensitive to crude oil as it is less of a competitor to refined products and is largely influenced by collection and disposal costs.

This poses a sort of “inflection range” where traditional slops consumers become buyers.

1.c. Regulation framework

MARPOL 73/78 convention

The International Convention MARPOL 73/78 provides a framework for managing maritime waste. The convention has been established by the International Maritime Organization (IMO) and is the international reference for maritime environmental regulation. It has been ratified by all countries playing a role in global shipping, which forces all vessels to comply.

It allows dumping of limited quantities of waste. The remainder must be collected by port infrastructures, with port authorities charging a fee.
The convention only affects the unloading of waste in ports and dumping limits; it doesn’t concern onshore waste processing or recycling.

The global port network still lacks reception facilities that are up to the task to collect ship residues. To achieve this, ships need a way to deposit their wastes on shore and conditions to access the facilities should pose no deterrent (whether practical or economical). The issue of processing waste after collection represents a hurdle for port authorities: they need a provider able to recycle hydrocarbon residues in a sustainable – environmentally and economically – way.
Ecoslops offers an integrated solution to port authorities, allowing them to comply with the MARPOL requirements while recycling residues on shore.

European Union: Directive No. 59/2000

The European Union is at the forefront in implementing the MARPOL requirements: EU policy is traced by the Directive No. 59/2000 regulating port waste management. The EMSA (European Maritime Safety Agency) was set up as a means to control illegal dumping in the sea. The Directive applies to all EU ports and all vessels, regardless of their flag, stopping at an EU port. Ports are required to provide facilities adapted to the port’s size, vessel class and types of waste in order to avoid undue delays to the ships, under penalty of compensation.

The Basel Convention and the EC Regulation No. 1013/2006

Hydrocarbon residues fall under the notification process described in the regulations as “hazardous waste to be recovered.” This implies that Ecoslops must comply with a number of rules when transporting and importing slops.

1.d. Segments and players

Ecoslops operates in two markets:

  • Collection of hydrocarbon residues is mostly a local market. Ecoslops may get involved in some ports (as in Sines, Marseille and in 2021 Anvers).
    Apart from the large ports, most of the providers are local SMEs operating in a single port. They work with a processing plant which receives the residues after collection. Tools employed are relatively simple and low-value-added: pumping on trucks or barges, storage and separation facilities.
  • Hydrocarbon residues processing also is heterogeneous. Industrial waste specialists are important players. The segment of maritime hydrocarbon residues is just a secondary, if not marginal, business to them: e.g. VEOLIA, TRADEBE, URBASER, WOS, AVISTA OIL AG. Although some companies focus on the maritime segment (e.g. NATURE GROUP, SINGAPORE CLEANSEAS, GULF ENVIRONMENT FZE), they usually don’t have an international scope.

In 2017, Ecoslops announced its will to increase the weight of onshore slops (lower flashpoint) in the mix because of their better quality and lightness.
Technologies are simple (chiefly separators and centrifuges) and companies aren’t able to sell renewed fuels. The hydrocarbons are mostly sold as fuel to energy-consuming industries such as cement plants.

2) The P2R column and products slate

Ecoslops aims at collecting and recycling residues and hydrocarbon-content blends starting with separating water, sediments and hydrocarbons. Water is cleaned before release, while hydrocarbons are processed in an ad hoc unit. Here, hydrocarbons are refined, yielding fuels.

Ecoslops deploys a unique reprocessing facility: for the time being, it is the only one able to process the residues to produce commercial fuels.
The P2R technology is at the core of Ecoslops’ value added.

Source: Company

Source: Company

The P2R distillation column is built out of standard components but constructed and operated with unique and exclusive engineering capabilities. The product slate depends on the feedstock (i.e. the blend of residues processed) and, in our example, is mostly composed of:

  • Light Fuel Oil (LFO), part of which fuels the plant (c. 10% yield in Sines);
  • Diesel, for sale (c. 35%);
  • Intermediate Fuel Oil (mainly IFO 180) for sale (c. 25%);
  • Extra Fuel Oil (XFO), a light bitumen used as or a component for bituminous industrial coatings (c. 30%).

Again, the above is for illustrative purposes, as the product slate varies depending on feedstock.

All the refinery’s products have a commercial value, including the light bitumen (XFO), which is sold to Soprema, a supplier of waterproofing systems to the construction sector.

At a prototype stage in 2019, the so-called Mini P2R distillation column is a small refining unit (size of a container) built to meet the slops collection volumes of medium-sized ports. Mini P2Rs are geared to refine lighter slops so that their refining output is composed of:

  • Diesel, for sale (c. 60%);
  • Intermediate Fuel Oil (mainly IFO 180) for sale (c. 40%);
3) Projects
3.a. First plant: Sines This port is developing quickly under the influence of shipping player MSC, which uses it as a regional hub, and the local oil and petrochemical sectors, led by Galp Energia and Repsol. The port includes three terminals: the oil terminal, containers and LNG.

In Sines, Ecoslops both collects and processes slops.


Ecoslops has a contract conferring exclusive rights for the collection of hydrocarbon waste within the sub-concession agreement, signed in 2012 with the port authority, lasting for 15 years.

In this context, Ecoslops provides utilities to the port:

  • steam (oil terminal);
  • compressed air (oil terminal);
  • water distribution to the entire port;
  • waste management to the entire port (both solid and liquid); Ecoslops has exclusivity.

Tariffs should broadly cover opex (or almost all of it) for the Sines utilities business.


The Sines plant started its first stage of operations in summer 2015. It has 130t/day of nominal processing capacity.
Feedstock is procured through:

  • sludge collection (notably from MSC vessels);
  • slops collection in the port’s oil terminal;
  • importing hydrocarbon residues from other regional ports.

Ecoslops has a contract with MSC (Mediterranean Shipping Company, the second largest shipowner of container vessels) which incentivises MSC to unload slops in Sines by lowering collection costs.

This allows Ecoslops to:

  • secure slops supply in Sines;
  • lower its feedstock cost basis (vs. buying slops externally).
3.b. Second plant: Marseille La Mède

In September 2016, Ecoslops and Total signed a MoU to launch a new slops refining unit within Total’s refinery in La Mède. The plant will regenerate slops from Marseille’s and neighboring ports.

The unit will use the existing infrastructures on-site (water treatment, steam, power, natural gas, loading station) and will supply Total in naphtha oil.
The investment will focus on the P2R asset and storage facilities.
Ecoslops is building and will operate the unit, hence focusing on its core competences; Total will supply services and the utilities


The Marseille plant will start its first stage of operations at the end of 2019. It has 130t/day of nominal processing capacity. Feedstock is procured through:

  • slops collection in the port’s oil terminal via Fluxel;
  • importing hydrocarbon residues from other regional ports via Ortex.

Ecoslops has a contract with Fluxel (operator of the oil ports of Fos and Lavéra) which incentivises boats to unload slops in Marseille by lowering collection costs. This allows Ecoslops to:

  • secure slops supply in Marseille;
  • lower its feedstock cost basis (vs. buying slops externally).
3.c. Prospective projects

Ecoslops aims at developing two new projects, Antwerp and Suez, and Mini P2R implantations, by 2021.

It plans to build one in Antwerp with a bigger nominal capacity at 200t/day.
The mooted Suez Canal one may be a standard one or a Mini P2R depending on more exhaustive market assessment of the slops available.

Antwerp Northern Europe constitutes a basket of opportunities for Ecoslops. Altogether, an estimated 250,000t/year are collected in Antwerp, Rotterdam, Amsterdam and Hamburg.

These residues were traditionally used as fuel by German industries. Changes in these industries’ feedstock policies, coupled with the lower oil price (which makes it convenient to buy less polluting alternatives to slops), brought a glut in slops. Ecoslops could offer a solution.

In June 2017, Ecoslops signed a memorandum of understanding (MoU) with the Port of Antwerp and ATPC (Antwerp Terminal and Processing Company), refiner and storage provider for the VTTI Group (Vitol Tank Terminals International).

The building permit will be delivered over 2020 and construction will begin for an opening by 2021. Expected capacity will be over 60kt a year, about twice the capacity of Sines.

Mini P2R

The smaller local refining unit is a new business model of Ecoslops being prototyped since 2018. Ecoslops intends to operate, sell, lease and offer services and maintenance solutions over a flexible refining unit (the size of a standard container box) which can manage 4kt to 6kt a year.

The prototype which should be ready to be tested at a client’s facility by the end of 2019 will allow to gauge the efficiency of the process on specific slops. Its small size means that it is suited for a large number of medium-sized ports, opening a much wider potential market than the original unit. With many of these medium-sized ports being distant from refineries, the resale value of refined products on site is expected to be high with strong margins.

Financing of the first units is expected to be 20% equity, although the business models can be varied, i.e. ownership may not be optimal depending on funding, tax, regulatory constraints.

We assumed in our modelling that

  • a first Mini P2R is sold in 2020
  • 2 Mini P2Rs are sold in 2021
    Units are a €3.5m capex effort. We assumed a 4kt/year output.
Suez project

Ecoslops with French government support signed a Memorandum of Understanding with Suez Canal Economic Zone for the realisation of a detailed feasibility study (statutory, technical, financial and commercial aspects of the project) which should be finalised in mid-2019.

The potential of recovery of oil residues transiting by the Suez Canal is estimated at more than 40,000 tons a year. Nearby Alexandria port with more than 5,000 stopovers a year may be a proper candidate as well.
Management will take the opportunity to operate its Mini P2R and, if there is a real opportunity, then build a P2R unit.

4) Growth runway

In 2022, Ecoslops should refine c. 210kt per year. This represents c. 0.2% of the world’s slops production and underlies a huge growth runway for the firm, which proposes a proven green solution to this by-product of global maritime trade.
Therefore, there is a wide scope to expand the project pipeline beyond the next two units we are accounting for based on current visibility.

Longer-term projects could be large (as in Antwerp); we see ports in Singapore, Tokyo and the US as prospects.

Ecological impact

Ecoslops ordered a study in 2018 conducted by Carbon 4 which evaluates its ecological efficiency in Marseille.

The results are the following:

  • 3x less CO2 released than traditional refining process
  • On a 30kt annual production, Ecoslops saves 22,000t of CO2, the equivalent in CO2 consumption of 11,000 European households.
Upside 189%
Price (€) 8
Market Cap (€M) 35.3
Divisional Breakdown Of Revenues
Change 19E/18 Change 20E/19E
  Sector 12/18A 12/19E 12/20E 12/21E €th of % total €th of % total
Total sales 7,449 10,454 15,745 35,308 3,005 100% 5,291 100%
Sines Refining & Mktg 7,449 10,454 11,296 11,568 3,005 100% 842 16%
Marseille Refining & Mktg 0.00 0.00 3,660 9,606 0 0% 3,660 69%
ARA Refining & Mktg 0.00 0.00 0.00 10,980 0 0% 0 0%
Mini P2R projects Refining & Mktg 0.00 0.00 789 3,155 0 0% 789 15%
Other 0.00 0.00 0.00 0.00 0 0% 0 0%
  Revenues Costs Equity
Dollar 90.0% 50.0% 20.0%
Emerging currencies 0.0% 0.0% 0.0%
Long-term global warming 50.0% 50.0% 20.0%
Sales By Geography
Portugal 100.0%
Production breakdown
Production breakdown 0 3Y forward E Change
Other 100.0% 100.0%
Changes to Story : 26/09/2019, Changes to Forecasts : 26/09/2019.