Good morning, and welcome to the second quarter presentation for Horisont Energi. My name is Bjørgulf Haukelidsæter Eidesen. I'm one of the two co-CEOs of Horisont Energi. With me, I have my colleague here.
Siri Melleberg, responsible for branding and communication, Horisont Energi. Then we have.
My name is Leif Kallestad. I am the other Co-CEO in Horisont. I will take you through the introductions and the first couple of slides, and then Bjørgulf and I will present the message to you today, between ourselves as we go forward. You have seen this slide before. I'm not gonna spend a lot of time on this, but since we introduced the BU structure internally in the company, we have been working along these lines, and we have been pushing the BarentsBlue projects for clean ammonia in the Barents Sea.
We have been working the Gismarvik terminal project and of course then the Polaris license in addition to the license preparation work we have been doing over the last few months that we'll come back to. Q2 has from our point of view been quite eventful. We know that some of you have been waiting for news and results and are impatient to hear more from us. We share as much as we can, although it might not be sufficient for you, but we really try to share news when we can. And what we can say is that during the quarter, we continued to make progress on the commercial agreements and aspects for the BarentsBlue projects.
Since we now are already into August and towards the end of August, we have continued to make progress in discussions with both potential customers, stakeholders, and also companies that we have to buy services or products from in the area. Also, we have of course our Polaris license, but we decided in the quarter to also submit an applications for the acreage that the ministry opened up early before the summer. We will submit an application before the deadline, which is actually tomorrow. So we are on track to do that.
In the quarter, we also had the BarentsBlue Days in Hammerfest, together with PGNiG and Fertiberia, which are our partners, for BarentsBlue and the Polaris. I t was a lot of people up there. It was a lot of interest generated around the projects, and we had, of course, a lot of local stakeholders, whether it's the municipalities or the Finnmark region or others, but also a lot of suppliers, and we had the involvement also from the Snøhvit license owners, et cetera. So we had a lot of activity ongoing up there, and we had a lot of presentations, and we had different panels discussing the different aspects, not only of the projects, but also about the renewable industry and the challenges it's facing.
On Gismarvik, I think the key issue, in addition to the work we are doing on a day-to-day basis, is that we have received the status of project of mutual interest from the EU, and we are preparing an application for CEF or EU funding. This is, of course, important because to the extent we are successful with such an application, it will reduce the capital requirements that we have to raise on our own. We also have changes to the board of directors. Horisont is a company now where the employees have also used the right to take a position on the board, and Céline Pitet joined us just before the summer.
Then on the Polaris license in the Barents Sea, the ministry approved an extension of the deadline for the BOK, or Decision of Concretization, and that deadline is November 1st. The main reason for extending the deadline is that we are working to mature the Polaris project more commercially. T hen we have already talked about the license application that we will submit by the deadline tomorrow. On the financial aspects of our business, we have communicated really for a long time that a key job for us is to extend the capital runway. O ne way that we control ourselves is to reduce costs, and costs are down by 50% if we compare Q2 2024 with Q2 2023.
The same is the case for the first half of the year. We have reduced the cash burn significantly. The loss was therefore reduced to EUR 29 million, compared to the EUR 58.7 million that we had in the comparable quarter last year. The reason for the reduction in cost is that we spend far less money on external costs related to studies and the use of contractors to make sure that we have the capacity to do the work we need to do. We have also continued to do measures internally, and we have improved the operational efficiency a lot. We expect to continue to do so and reduce the cash burn further through continued cost reductions.
The cash at the end of the quarter was NOK 138.6 million, and the capital runway hasn't really changed from the previous quarter. It is such that we have sufficient funding to carry out the activities that we are planning to do in the second half of the year, and also to work the key decision milestones into 2025. No major change there. What we should say is that we are exploring additional funding for the company and are working hard to make sure that we can provide a more sustainable basis for the future of Horisont. We can carry out the business without thinking that the capital runway has not been extended beyond what it is today.
We will come back to that and report on that, as soon as we have news to give you. Bjørgulf?
Yes. Thank you. Let's move forward. Moving on to the project reviews part of the presentation. We start out with Horisont Ammoniakk, where our key project is the BarentsBlue project. I would say just to give you a brief recap of the key facts related to BarentsBlue. It is the, it's the world's first world-scale clean ammonia plant, so being the biggest in its market, having key. Our key competitors, we compare with projects in the U.S. and the Middle East, mainly. T he key figures is the investment decision now being in 2026. Startup is towards the end of 2029, under 2030. So schedule has been aligned across the project. It's the first production.
Number is 1 million tons for the first step, which we will achieve not in 2029, but in 2030, because 2029, there will be a more limited production towards the end of the year. A production share, 50%. It's located in Northern Norway, making Northern Norway a big production hub for clean ammonia. Together with Polaris, we will offer a best-in-class carbon footprint and also full taxonomy compliance, which I think is quite important, and it's quite important for our market penetration for the off-takers. So this is a big asset for us when we are talking with clients.
We are still in an IPCEI hydrogen project, and our plan, when we have achieved the commercial maturity that we're looking for now, to start to tap into the IPCEI hydrogen funding from Enova, so that we expect towards the end of the year, and we have strong support from the local community as we create several hundreds of new jobs in the area. Just an overall statement on the BarentsBlue is that we really focus on this project, and also on the other projects, on the commercial maturity of the projects, so the key factor for us now is to achieve a high level of commercial maturity, allowing us to enter into the FEED phase for this project, so our focus is on the commercial agreements that we are negotiating.
To give you a recap of the key developments, we have a JDA signed with Fertiberia for the project. We have focused really on the first train, making second train in a future option. We have secured the power. We have a modular design for the plant. This was the first modularized clean ammonia plant design of this type, enabling also reuse of the design in any location globally. So it's a base for future growth, as well as an efficient way to install a modularized plant in this location. We have a good interface activity towards the Polaris CO2 storage, and we also are planning for having a potential CO2 terminal at the BarentsBlue site for the Polaris terminal, Polaris project, I mean.
We're also working with LPG, so having LPG as a backup, fuel, meaning that we're able to achieve an even higher production availability, so producing more ammonia and be more reliable, so that also improves the value of the project to introduce LPG. On the offtake side, we are working with offtake for the full volume that we are going to, that is the base for the bankability of the project. W e have large industrial companies who we are working with, negotiating term sheets. From earlier on, we have announced LOIs with VNG and Barents Naturgass, but there's also a larger group of large industrial players that we are negotiating with, with good progress on those discussions.
Still, negotiations on the feedstock of the gas for the plant and also the term sheet negotiations for carbon storage service on Polaris is still ongoing. So the key focus now is really to get completion on these commercial discussions and achieve the level of commercial maturity that we need to move forward in the project. We have a high level of technical maturity, so commercial maturity is the focus. Moving on to Horisont Carbon, our other subsidiary, which focus on offshore carbon storage and the customer side of carbon storage. To give you a recap of Polaris, it is currently the only CO2 storage facility in the Barents Sea. The rest of the licenses that are awarded are in the North Sea.
This project, aligned with the BarentsBlue, have now an investment decision in 2026, and start up aligned with BarentsBlue. The anticipated capacity is in the range of three to six million tons. We have 50% share alongside PGNiG. T his storage, I'll come back to that, has now, which is an important achievement, proven the capacity required for BarentsBlue, which was an important achievement for us. This will provide us with security for award. The key focus there is also on the commercials, which is the key thing to achieve the commercial surely for moving forward. Just to give a recap on the key developments, we got PGNiG in as operator and partner, 50%.
The work for maturing the reservoir, the containment, the capacity, and the volume of the reservoir has been completed, in terms of confirming, the capacity required for BarentsBlue and the containment of the volumes for, let's say, the period that you are required to, which is thousand years. On the further achievements, we have a permitting program that for the onshore, crucial part of the BarentsBlue permitting program. We have conducted feasibility and concept studies, and also all the work for the first phase of the Polaris, that we are obliged to complete as part of the license. We have EU taxonomy compliance verified, which is very important, for the carbon storage activity in the EU, and this has been also audited by DNV.
The power for the Polaris storage is also secured through the BarentsBlue power. We have MOUs for storage, and we are now, as you know, developing term sheets with BarentsBlue for this project. T here's a strong commitment and support also in Northern Norway for this project, and with the next milestone being the BOK, first November twenty twenty-four. BOK is just a license milestone, moving into the next license phase. Moving on to Horisont Infra, which is our subsidiary, really dealing with midstream CO2 infrastructure. In this part of the business, we are an open access infrastructure, also for other carbon storage licenses, not only for Horisont licenses.
We are creating an infrastructure that can be used for emitters and for storages alike, but also for our own storages. So this has a different character than the Horisont Carbon subsidiary. To recap, the main project that we're working with here, this is Gismarvik CO2 Hub. It's located in Norway's largest regulated industrial park, Haugaland Industrial Park. We also anticipate here an investment decision in 2026 and start up in 2029. This is aligned with the status of the offshore carbon storage licenses in the North Sea that are most likely to connect to this terminal. We have a secured power for this one as well. I will come back to that. So we have to say the main infrastructure or the main elements are there.
We focus now also here on the commercial maturity, to get to a stage where we have commercial maturity to move into the FEED phase. The key developments, to give a recap of that, this is actually one of the largest CO2 terminals in Europe, with a large local presence of CO2, both existing and in development in the industrial park. I t's a good basis for commercializing and storing CO2 in Norway, but also for receiving very, very large shipments of CO2 from Europe, as this location is designed for being able to receive ships up to 50,000 cubic meters. V ery, very large CO2 vessels can arrive here with CO2. The planning program for the plant is approved. We are ready to hand in most applications that are required.
We have tight study dialogues at various stages with several carbon storage licenses in North Sea, which is obviously key to progress and a key commercial aspect. We have very high level of maturity on the CO2 feedstock. So the key thing now is the commercial maturity with the licenses. We are conducting also paid feasibility studies interested parties in the region, many are CO2 emitters, so including transport of CO2 from their sites to our terminal. We are furthermore doing studies with offshore licenses. The standard design for this plant can be reused, so we are looking also into early phase reuse cases so we can scale down further down the road and reuse this for growth.
We have an MOU with Chane, which is formerly Koole Terminals, for development of CO2 value chains across Europe. They also have large CO2 terminal sites on the continent that can be further transported onto this, our Gismarvik site, for storage in North Sea licenses. We have an MOU and term sheet with E.ON for CO2 volumes to the terminal and connected carbon storages. All infrastructure is secured in the site, including the power for the first phase of the project. We have a high level of technical maturity. The key focus is on the commercial part. We also sign an extension to the option agreement for the site, which is obviously key to secure, so we have a longer horizon for working up the commercial parts for this term.
This is part of a big PMI project headed up by Elleke Heath, which is called Octopus. This allows us to be eligible for a CEF funding, which is a particular funding arrangement in EU, which has been allowed for quite large support for the project. On the milestone, give an overview. We are looking at DG2 in twenty twenty-five, while DG3 is now moved to twenty-six. For the infra, just to repeat, the Gismarvik, it's related to the offshore licenses. For BarentsBlue is the alignment across the different parts of the project, including the gas supply from Melkøya, where it's now fully aligned and updated, so that there is an agreed schedule across the project.
For the new, we have a new license. There is also highlighted a potential timeline for that. Moving on, then, I will hand it over to Leif to finish it off and provide us with the key highlights from this quarter.
Yeah. Thank you, Bjørgulf. We believe that we still have a good position as an early mover because things have taken time for us. But I think that you can see that things take time for other companies as well. This is a business that is not easy to move. It takes time to establish the value chain. So we believe that our position here is still good. Good work has happened in the BarentsBlue project, and we have done good progress in the commercial aspects here. We said in the previous report that we would have something to report by the end of the summer.
What we are saying is that we are making good progress, and we will get back to you as soon as we can with specifics. We think it's very important for us, and it's good for us that we are submitting our application, and it is today. I got my dates mixed, so it's today, August twenty-nine, that we will submit the application. T hat we continue to mature the project portfolio that we have. As Bjørgulf has pointed out, commercial maturity is the key for us. We have spent money, but more importantly, gained a lot of work and matured the projects technically over the last three to four years, and we are benefiting from that now. The focus is on commercial maturity.
We are looking at several ways to take down the capital requirements of Horisont. It's obviously important, and some of this is related to the public funding potential that we have, but also we are working to secure financing through more conventional channels. We have over the years built a lot of competencies and know-how, and tactical capability in Horisont, and on the IP side, we have a range of patents that we have been granted or otherwise are in the application stages, so we have documented also the technical work we have done and the solutions that we have developed.
We believe that although things take time, we are still positioned well to create value for shareholders, and realize that those of you who are buying and selling shares more frequently are impatient to see that we are delivering results. I think it is important to point out that we have reduced costs by 50%, quarter by quarter, first half compared to first half, and that we maintained cost focus and are planning to reduce costs further as we enter the fourth quarter of this year. T hat is summarizing our presentation today, and then we can address some of the questions that we have received.
We move on to the Q&A session. We have received a couple of questions already, so but please continue to submit your questions. The first question we received was whether we apply for the new license alone or together with the PGNiG Upstream Norway. W e are only able to comment on ourselves, so we will not comment on any others, but we are applying for license, and whether there is group or not, that will be that we have to come back to later. Then there is also a question of if I can elaborate on that we have secured indicative offtake term sheets for significant volumes of clean ammonia with potential large industrial clients. We can comment that.
It is a group of companies that we're working with for offtaking ammonia that secures the full required offtake, and actually is somewhat more than we require for getting the full bankability related to the project financing and moving the project forward. We are very happy with our, let's say, market penetration for the volume. We think that it's due to our high level of sustainability and taxonomy compliance, and also being a European project within Europe that provides us with an advantage towards US and Middle East competitors. We have a significant market interest from very strong industrial clients. We are very happy with the progress and are into detailed term sheet discussions and negotiations.
We will come back with information about this later on. There's also a question about the FID, maybe late 2025, 2026 in BarentsBlue and then also following Polaris. Whether we can comment on this? What we are seeing is that we have worked with aligning the scope and schedule and progress across the project, and I think it has been revised, looking into the, let's say, deep into the schedules for different parts. Following that process of schedule alignment, we have updated it, and it is driven by, let's say, partly also some updates to scope. We have to also support the Snøhvit Future project as they have their schedule.
We need that scope for BarentsBlue, so we need Snøhvit Future to complete its scope, and then for us to connect on the back side of that to secure our gas. Then it's the next question, "Is the Gismarvik CO2 Hub comparable to Northern Lights project?" So Gismarvik CO2 Hub, it's a terminal like the Northern Lights project. They have a CO2 terminal. They have a terminal dedicated to their own storage, and I think their max capacity is 5-7 million. We have designed a terminal that's max capacity is 24 million, and which will serve both our own storage, but also third-party storage. I t's more like an open infrastructure for other folks to connect.
We also try to make it to help for Norwegian emitters to connect to directly, so I think there are some differences there, both in size and also design-wise. This is a bit different design, also because of the size, but we have evolved the designs compared to what Northern Lights designed. There is a question on whether the agreement with PGNiG, Orlen, and includes a clause about the payment to Horisont. I'm not able to comment on this, so that is confidential. What can we say about our partnership with E.ON? We are moving the partnership with E.ON forward. E.ON is a key partner for us, both in the ammonia space, hydrogen, and also in the CCS space.
We are working with E.ON and are revising and refining our partnership agreement on CCS this fall. This is still going strong. There is a question on, "What are your expectations with regard to the new CCS license application?" I guess some things we can say there is that we expect that it will be awarded within 2024. We don't know much more than that. It's I think we have a very strong application. We worked for a long time with the area, and it's a mature value chain, and there are mature customer relations, high commercial maturity on the customer side.
We would only wait and see what - how that turns out, but, we think we have a strong position. Then there's a question to Mr. Carlestar. If I can read the question: "If you believe you're going to create value for shareholders, why you are not buying shares?
It's a good question, and I've received this question many times. T he only thing I can say about that is that I have external commitments that precedes my employment with Horisont, and that means that I cannot buy shares in publicly traded companies. M y agreement with Horisont is based on that assumption. I t's not that I would not like to, but it's something that I cannot do. T hat is the only thing I can say about it.
Yes.
But I understand the question, that's for sure.
Yeah, yeah. T hank you for all the questions. That was actually the last question we received. W ith that we thank you for attending and listening in and, see you next time for future updates.