Refiners to help, but target fishing, trucks, buses first

They expect to tell the Energy Ministry on Friday how the cut will take effect.

PTT Aromatics and Refining, Thai Oil, IRPC and Bangchak Petroleum have given a commitment to the margin reduction to Energy Minister Poonpirom Liptapanlop, who is planning to talk to the three non-PTT refiners this week.

The others are Esso, Star Petroleum Refining and Rayong Purifier. Of all seven, only Star Petroleum is not a listed company.

The four PTT refiners will decide before Friday whether the cut will result in lower pump prices for the sake of the general public or take the form of a price cut for particular groups of users. "I understand all refiners are listed, and among their outputs are money-losing bunker oil and liquefied petroleum gas (LPG), but it's the ministry's responsibility to ask them to be fair to the public. From 2006-07, their diesel margin was $20 [Bt643] per barrel, and this rose to between $35 and $36 this year," the minister said.

PTT president Prasert Bunsumpun said the group was ready to help the public but that the margin cut required thorough consideration, because the impact on each refiner was different. This is due to different technology and different levels of diesel output. For example, some refiners produce a high level of bunker oil and LPG, but bunker oil is now cheaper than crude oil, while the LPG price is capped. This reduces their gross refining margin.

Prasert said he wanted this subsidy to last between four and six months. Rather than lowering pump prices, only particular sectors - like fishing vessels, lorries and public buses - should benefit from the cut, because it would help low-income earners.

"If this measure runs for a long time, the burden on PTT will be too great. PTT has shouldered losses for each litre of diesel sold. Refiners' profits are not as high as expected," he said.

Refiners are selling LPG for $30 a barrel, against the Dubai crude-oil price of $128.

Prasert said gross refining margins in the first quarter fell year on year and quarter on quarter, as the percentage of refined oil rose at a slower pace than did the price of crude oil.

He said while all were affected, all must adjust themselves in terms of production efficiency and energy saving. The burden should not be left on the Energy Ministry or PTT.

"If it is left with PTT alone, and PTT stumbles on a problem, the country could suffer," he said.