ASIA NEWS NETWORK
WE KNOW ASIA BETTER
Thai Oil keen on refinery projects in Indonesia, Myanmar
Publication Date : 16-08-2014
Thai Oil is interested in taking part in oil-refinery projects in Indonesia and Myanmar, according to chief executive officer Veerasak Kositapaisal.
Indonesia's state-owned oil and gas company Pertamina recently approached PTT group on jointly investing in a project to expand the oil-refining output there. Pertamina currently runs six oil refineries across the country, with a combined capacity of about a million barrels per day.
Veerasak said that since he had received few details about the project, it was too early to discuss whether Thai Oil, a listed oil-refining subsidiary of PTT, would join in the project. Nevertheless, Indonesia, he pointed out, currently has to import as much as 500,000 barrels of oil per day to satisfy its current demand of 1.2 million barrels per day.
Earlier, Thai Oil signed a heads of agreement with Pertamina jointly to undertake a detailed study on a project to produce paraffin wax. He said Thai Oil expected to decide whether to invest in the project, which would use raw materials from Pertamina's Cilacap refinery in Central Java, by the end of this year. Paraffin wax is a raw material for the manufacturing of various products such as batik fabric, automotive tyres, particleboard, furniture, shoe polish and candles.
As for Myanmar, Veerasak said Thai Oil regarded it as a "focused country" where it would like to expand its investments outside Thailand. He said the company, together with the parent firm PTT, would submit a proposal to upgrade the Thanlyin oil refinery near Yangon. The Myanmar Petrochemical Enterprise last month issued an invitation to tender for the rehabilitation of the Thanlyin refinery under a joint-venture scheme. The deadline for submitting bids is October 13.
An initial plan would involve an upgrade of the Thanlyin refinery to a minimum capacity of 15,000bpd, while building new oil refineries and petrochemical plants would be carried out over the long term. Myanmar currently has to import all refined oil products to meet its annual consumption of 70,000bpd, which could easily go up to 150,000-200,000bpd in a near future, he said.
Thai Oil expects gross margin of its key products - refined oil, paraxylene, and lubricating oil - in the current half of this year to change little from the first half. Nevertheless, the oil-refining business will lose a month of income this third quarter due to the 46-day maintenance shutdown that started on June 15 and finished at the end of last month. Overall, the refinery's utilisation rate is expected at 94 per cent of its designed capacity this year, down from 102 per cent in 2013.
Thai Oil's gross margin, excluding accounting impacts from oil inventories, stood at 5.1 per cent in the second quarter, down from 6.1 per cent in the first quarter and 5.6 per cent booked a year ago. During the first half of 2014, the company reported net profit of 4.63 billion baht, up from 1.68 billion baht recorded during the same period of last year. Earnings before interest, taxes, depreciation and amortisation increased from 7.63 billion baht to 8.57 billion baht during the same period.
Meanwhile, Veerasak said a 12-billion-baht linear alkyl benzene (LAB) project, undertaken through a joint venture between its subsidiary Thai Paraxylene and Mitsui & Co, was 52 per cent complete would commence commercial operation in the fourth quarter of 2015 as scheduled. The plant will supply its products mainly to detergent producers in Thailand and other Southeast Asia countries.
US$1 = 31.82 baht