It posted a net profit of about Bt1.1 billion in the corresponding period last year.

However, its consolidated earnings for the quarter recorded a net loss of only Bt33.65 million.

Bangchak reserved a possible loss of Bt582 million for oil inventories in the quarter.

"Global oil prices in the third quarter relentlessly declined, while refineries shouldered the higher prices attached with futures contracts. The difference between the purchase price and market price was about US$3-$4 [Bt110-Bt147] per barrel," said company president Anusorn Sangnimnuan.

He insisted that if oil prices go up in the current quarter, the company's performance would not be affected as this was merely an accounting loss.

PTT Exploration and Production (PTTEP) also posted a fall in third-quarter net profit yesterday, with earnings down 5.2 per cent to Bt6.81 billion from Bt7.18 billion in the same period last year. It attributed the drop mainly to higher exploration costs and depreciation charges.

A PTTEP statement said total expenses had surged 52 per cent to Bt11.36 billion, with exploration costs more than tripling to Bt1.53 billion from Bt358 million in the third quarter of last year. Depreciation charges also soared, rising 78.9 per cent to Bt4.32 billion.

For the first nine months of the year, PTTEP's net profit was Bt21.93 billion, up 29.6 per cent from Bt16.92 billion in the same period a year ago.

Meanwhile, the company yesterday announced the formation of four subsidiaries - PTTEP Bahrain, PTTEP Holding, PTTEP Indonesia and PTTEP Bengara - to carry out petroleum exploration and development activities.

In its filing to the Stock Exchange of Thailand, Bangchak blamed the change in its inventory method from first-in-first-out to weighted average with effect from July 1 this year for the hefty net loss in the third quarter.

The company recorded an inventory gain of Bt877 million in 2005, while it lost Bt582 million in the third quarter this year. This comprises an inventory loss of Bt232 million and allowance for write-down of inventory value at Bt350 million, the company said.

From July to September,

the company's revenues were Bt23.74 billion, and earnings before interest, tax, depreciation and amortisation came in at Bt243 million.

The company set an allowance for write-down of inventory value at Bt350 million.

The decline in Bangchak's gross refining margin from $5.36 per barrel to $3.23 also widened its net losses.

For its retail oil station business, the company's quarterly marketing margin (excluding lubricants) was Bt0.68 per litre, far above the minus-Bt0.17 in the same period last year.

Despite the hefty net loss in its quarterly earnings, Bangchak alone showed a net profit of Bt906.88 million in the first nine months of the year, compared with Bt2.53 billion in the same period last year.

Anusorn also said Bangchak's board had recently agreed that PTT Plc could invest in a combined-cycle power plant to supply electricity for the company. The plant will be capable of producing 19.7 megawatts of electricity and 90 tonnes of steam per hour.

Bangchak is expected to buy the total output at an approximate cost of Bt950 million per annum. After 25 years, the power plant's ownership will be transferred to Bangchak.