Thai Bangchak plans shutdown, then none for 2 years

17-Dec-2008 Intellasia | Reuters | 7:01 AM

Small Thai refiner Bangchak Petroleum BCP.BK said on Monday it planned to shut its refinery for a week in December for maintenance to improve oil product quality but expected no major shutdown over the next two-years.

“It will be this month, ahead of our plant upgrade completion, which is also coming up,” Chief Executive Anusorn Sangnimnuan told reporters.

Anusorn gave no specific timing for the plant shutdown but said: “After this, we won’t be having any shutdown for at least two-years.”

Bangchak, majority owned by the finance ministry and top oil and gas firm PTT PCL PTT.BK, has spent US$378 million on a product quality improvement (PQI) programme for a fuel-oil cracking facility that is close to completion.

The programme would allow the refiner to raise capacity to up to 100,000 barrels a day in 2009 from around 74,000 barrels a day this year, Anusorn said.

“Once PQI is completed, our average production target could rise to as high as 91,000-95,000 barrels a day for next year,” he said.

Bangchak’s refining margin, excluding the impact from losses or gains in oil inventory, should stay as high as US$6 a barrel in 2009, much the same as 2008, said Anusorn.

The firm has hedged as much as 40% of its products to be sold next year with a refining margin at US$7 a barrel, he said.

The company’s gross refining margin would be close to US$5 per barrel in the second half of 2008, Anusorn said earlier, compared with a margin of US$7.97 in the second quarter.

Bangchak would spend at least 1.1 billion baht (US$31 million) on investments in 2009. Half of this would be to improve product quality, Anusorn said.

In the longer term, the firm is studying a plan to invest in alternative projects including biodiesel and ethanol, which, if it goes ahead, would be worth around 3 billion baht, he said.

Oil demand was expected to fall 3-4% from this year’s 62 million litres per day, he added.

At the midday break, Bangchak shares were up 0.68% at 7.40 baht, while the main index.SETI was up 1.92%.