Thai refinery blaze ‘just a blip’

05-Jul-2012 Intellasia | | 1:59 PM

Maybank Kim Eng Securities (Thailand) said the impact on Bangchak’s operating results will be limited by insurance covering property damage and business interruption.

But the securities firm noted that the company’s shares could be subject to continued pressure from the government’s new safety requirements, which state that the Bangchak refinery should be moved out of Bangkok.

Any relocation requires a huge capital investment and construction takes time, said the firm.

“The key risk [for the company] that may put pressure on the share price is the comment by the energy minister that the government may need to reclaim the land in a radius of 100 metres around the refinery or move it to a remote area,” said Maybank Kim Eng.

While land reclamation may be easier than relocating the entire refinery, such a move would face protest from residents of the surrounding community.

Plant relocation would need an investment of as much as 50 billion baht based on replacement cost of $15,000 per barrel and production capacity of 120,000 barrels per day.

The Bangchak plant sources 60 percent of its crude domestically and imports the rest from regional suppliers such as Indonesia, Malaysia, Australia and Vietnam.

The company may have to spend as much as 30 million baht over two months to repair the damage.

If the affected crude unit needs to be rebuilt, it could cost 100 million baht and take three months, said president Anusorn Sangnimnuan.

Meanwhile, Bangchak’s major shareholder, PTT Plc, is now considering whether to reschedule shutdown maintenance for its affiliates IRPC and Thaioil.

PTT had earlier planned to shut down facilities at IRPC from July 20 to August 7 and at Thaioil from August 1 to September 7.

The firm has also made a standby purchase order for oil from other refineries in domestic and international markets, said Nattachat Charuchinda, chief operating officer of the petroleum business group.

“We are ready to secure oil supplies for motorists despite the accident,” he said.

BCP shares closed yesterday on the Stock Exchange of Thailand at 22.80 baht, down 60 satang, in trade worth 620 million baht.

http://www.bangkokpost.com/business/economics/301020/refinery-blaze-just-a-blip