A feasibility study is being carried out and the company is in the process of approaching potential partners, with the hope of concluding the matter in November, said executive chairman Supapong Krishnakan.

"The investment sum is set at Bt5 billion, which is really small compared to that of others. We're a small player and we need technology which fits our size. The new refinery will be designed to produce fuel oil and petrochemical products," Supapong said in a group interview earlier this week.

To finance the investment, the company is considering borrowing half of the money and raising the other half from new shares. He said there was room for additional borrowing by Rayong Purifier due to its low debt-to-equity ratio.

This year the firm expects to reap Bt30 billion in revenue. It has increased its refining capacity from 11,000-12,000 bpd to 15,000 bpd. It also seeks to export more of its products, which should generate Bt15 billion in revenue this year.

Rayong Purifier's refining margin in the first half of the year averaged US$2 to $3 (Bt75-Bt112) per barrel. Supapong said he expected the annual average to remain at that level, as a result of tough competition as well as rising operating costs.

Aside from putting up Pure fuel stations in Thailand, Rayong Purifier has also looked to expand into Vietnam and Cambodia.

It has put up a refinery in Vietnam with a capacity of 2,000 bpd.

"The construction has been completed and since early this year, we have test-run the engine," Supapong said.

However, the refinery is not yet ready for commercial production, due to the mismatched conditions of the central and rural Vietnamese governments. Rayong Purifier hopes to solve the problem by securing a new local partner.

After a shareholding restructuring, its stake in VTN-P (Petrochemical Joint Venture) is being reduced from 60 per cent to 44 per cent. The Vietnamese partner will hold a 44-per-cent stake and the remaining 12 per cent will belong to a trading company.

"Through the new partner, which provides higher marketing flexibility in Vietnam, we expect the refinery to commence commercial production within two months. And if the results are satisfactory, we are looking to expand capacity 10 times, due to high oil demand in the market," Supapong said.

Rayong Purifier has also provided a Bt16-million loan to a Cambodian oil trader to put up an oil depot along the border.

Construction is expected to be completed within three to four months. After the loan is repaid, probably within the first half of next year, Rayong Purifier will benefit from the profit-sharing agreement with the trader.

It stands to reap 30 per cent of the profit from the venture.

Commenting on the company's plan to buy back a 50-per-cent stake in Siam Gulf Petroleum Co Ltd, Supapong said Rayong Purifier was highly concerned about the repurchase price.

"The offered price is equivalent to a new investment. We are comparing the price with the new refinery's construction cost and we will take the best option," he said.

Rayong Purifier sold the stake before listing on the Stock Exchange of Thailand, with the agreement that it could buy back the shares by the end of 2007.