EX 10.11
RENTECH, INC.
March 4, 1999
Xx. Xxxx Xxxxxx Xx Xxxxxxx
BC Projetos
Av. Xxxxxxxx Xxxxxxxx, 45/10 and.
Rio de Janeiro, RJ CEP 20080-003
RE: Memorandum of Understanding
Dear Xxxx:
The purpose of this letter is to set forth an agreement between BC
Projetos Ltda. and Rentech Inc. for the purpose of exploiting the opportunities
in Brazil for use of the Rentech Xxxxxxx-Tropsch Technology. This letter will
address the following subjects:
o Background of the situation
o The Petrobras/TDA project
o BC Projetos role and Rentech relationship
BACKGROUND OF THE SITUATION
Rentech is actively pursuing an opportunity with Petrobras for an evaluation of
the use of the Rentech Technology in the Amazon region to convert stranded
natural gas, currently being re-injected, to a clean liquid fuel for
distribution in the region. BC Projetos has relationships with Petrobras and has
assisted Rentech in setting up meetings and presentations to Petrobras.
It is the intention of Rentech that the initial feasibility work be funded by
the U.S. Trade and Development Agency (TDA) which will require a detailed
proposal and approval for funding.
Rentech and BC Projetos have had several conversations and meetings regarding
the possible mutual advantages of working together on projects in Brazil and
specifically targeting the Petrobras project for the Amazon.
THE PETROBRAS/TDA PROJECT
Petrobras is the national energy company that controls all the natural gas and
oil in Brazil. They have significant natural gas reserves in the Amazon region
that they re-inject because there is no transmission or distribution
infrastructure. A number of studies have been completed for the utilization of
this resource. These studies include a transmission pipeline, conversion to LNG
for shipping out of the region, and power generation. It is our understanding
that those options have not proven economical.
Rentech is proposing that a feasibility study be undertaken to consider the
application of the Rentech Xxxxxxx-Tropsch Technology. Followed by a detailed
conceptual study. Should the project prove to be economical upon completion of
the detailed conceptual study then Rentech and BC Projetos would seek a project
owner and developer.
The funding for the feasibility and detailed conceptual work would be through a
grant from the U.S. Trade and Development Agency.
BC PROJETOS ROLE AND RENTECH RELATIONSHIP
BC Projetos is an engineering firm in Brazil with years of experience and a
well-qualified process engineering staff. BC Projetos also has relationships
with Petrobras that can assist Petrobras in moving forward with the proposed
project as well as other potential projects that could utilize the Rentech
Technology.
Rentech proposes that this letter set up a relationship with BC Projetos for
projects in Brazil. BC Projetos would be the engineer of preference in Brazil
for Rentech with the role of BC Projetos defined as follows:
Marketing support for Rentech in Brazil including:
o Identification of potential projects.
o Setting up meetings for Rentech with Brazilian clients.
o Identification of potential partners for project and
financing structures in Brazil.
o Proposal translation and submittal for projects in Brazil.
Engineering support for projects in Brazil including:
o Feasibility engineering.
o Data gathering.
o Preliminary flow sheets and process material balances.
o Site tours and reviews, development of plot plans.
o Soils analysis and sampling.
o Environmental permit process and review.
o Environmental permits applications.
o Local material and construction cost estimating.
o Government regulations on importing and taxing of process
plan equipment.
During the marketing phase on any project, BC Projetos would pay for its own
marketing expenses and Rentech would pay for its own marketing expenses. Once a
project is defined and a client has awarded a contract to either BC Projetos or
Rentech, then each party will receive payment for their respective services
pursuant to a mutually negotiated contract between them.
The U.S. TDA places restriction on payments of grant monies to foreign
engineering companies of 25% of the grant. Accordingly the Petrobras/TDA project
that has been targeted would have BC Projetos working with a U.S. Engineering
firm. Rentech will use its best efforts to negotiate a scope of work with the
U.S. Engineering firm that would provide the maximum services for BC Projetos.
Should Rentech receive any interest by parties in Brazil, those would be shared
with BC Projetos and a mutual response and follow up would be developed. Rentech
will provide marketing material and technical information to BC Projetos in
support of their marketing and engineering efforts.
It is understood that neither Rentech nor BC Projetos can control the clients
and should a client desire to use a competing Xxxxxxx-Tropsch technology, BC
Projetos is free to provide the engineering for the client using that specific
technology. Likewise, should the client prefer to use an alterative engineering
firm, together with the Rentech Technology, then Rentech has the right to
provide the technology and work with the client's designated engineer. However,
both Rentech and BC Projetos will diligently and in good faith attempt to
convince the client of our team strength and preference for working together.
Any disputes arising under this Memorandum of Understanding would be settled
through arbitration under the rules of the American Arbitration Association.
Should you have questions please call.
Very truly yours
Rentech, Inc.
/s/ Xxxxxxx Xxxxxxxx
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by Xxxxxxx Xxxxxxxx
Director for GTL Marketing
Read, Acknowledged and agreed to by:
BC Projetos
/s/ Xxxx Xxxxxx Xx Xxxxxxx 8 MAR 99
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Signature
Xxxx Xxxxxx Xx Xxxxxxx
Director
