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Published on April 11, 2008

PTT Aromatics and Refining will be able to double its annual aromatics production capacity, including paraxylene and benzene, from 1.1 million to 2.2 million tonnes next year after the construction of its second refinery and aromatics complex is completed and starts operation this September.

President Chainoi Puankosoom said yesterday that the second refinery and aromatics complex would produce 275,000 tonnes of aromatics products this year. The increased production has already been ordered by the company's clients.

"The sales volume of aromatics products will certainly increase from last year. However, I can't say how much sales revenue could be, because it depends on the global oil price which affects the product-to-feed margin of aromatics products. Petrochemical products at the moment are swinging between US$5 [Bt158] and $10 per barrel," he

said.

Besides, the biggest petrochemical firm in India, Reliance, which is scheduled to operate this year with a combined production capacity of 580,000 barrels per day, may affect global aromatics product prices in the second half of the year.

At present, PTT Aromatics and Refining's refining margin is about $5 to $6 per barrel, similar to other companies. The company forecasts that paraxylene demand in the global market will increase in the second and third quarters in line with seasonal demand. However, the company has to be aware of the US recession and the chance that this problem will spread to European Union countries and China, Chainoi said.

He added that PTT Aromatics and Refining planned to invest $1.22 billion from 2008 to 2012 to build the second refinery and aromatics complex, upgrade phase 2 of the condensate residue splitter, a synergy project and Euro 4. The company expects a return on investment of at least 15 per cent on average from each project.

From the total investment budget, the company will spend $557 million this year. PTT Aromatics and Refining is now considering a debenture issuance of $500 million and bank loans.

"Although the company's cash flow is about $1 billion - which is enough for the five-year investment projects - we would like to keep an eye on interest rates, particularly long-term rates. Interest rates at the moment are very low after the Fed announced a reduction of short-term interest rates in the US, and we are also watching this," he said.

Nalin Viboonchart

The Nation