Low oil prices point to revenue decline

PTT is likely to post declining revenue and profit this year, in line with the fall in global oil prices.

PTT chief executive Prasert Bunsumpan said yesterday the company would do its best to maintain this year's profit at almost the same level as last year through a cost-reduction programme, the slowdown of new investment and boosting of product sales.

However, he said, because of fluctuating oil prices, PTT might post a negative fourth-quarter financial result for 2008 following losses in its refinery business. But he is confident PTT will post a yearly profit for 2008 and could meet the revenue target of Bt2.2 trillion.

Prasert added that PTT would be more cautious with investment this year and focus on continuing projects. Some major projects will be further delayed, such as investment in NGV (natural gas for

vehicles) pipelines.

The number of NGV stations to be set up this year will be reduced from the target of more than 400 to between 350 and 400.

He said PTT had yet to discuss with the government new prices for NGV and when it would adjust these prices.

PTT, which pegged the NGV price at Bt8.50 per kilogram, had planned to increase the price this year to offset losses. It calculates the real cost of NGV at Bt14.50 per kilo.

PTT Phenol yesterday signed a syndicated-loan deal worth Bt4.25 billion with five banks as part-funding for the construction of its new Bisphenol A plant.

The five institutions are Siam Commercial Bank, Krung Thai Bank, Bangkok Bank, TMB Bank and the Government Savings

Bank.

Located in the Hemaraj Eastern Industrial Estate (Map Ta Phut), the plant will have an annual capacity of 150,000 tonnes.

The total project cost is Bt8.5 billion. The syndicated loan will finance Bt4.25 billion, while PTT Phenol's shareholders - PTT, PTT Chemical and PTT Aromatics and Refining - will contribute the rest jointly. The plant aims to serve both domestic and regional markets and be in operation by the second half of 2010.

It will serve as a stepping stone for the PTT Group's entry into the higher value-added engineering plastic business, as bisphenol A is the main raw material for both the expanding polycarbonate and epoxy-resin businesses.

Polycarbonate is a specialty plastic used in the automotive industry, as a component in electrical appliances, and more commonly in the manufacturing process of DVDs, VCDs and CDs.

Epoxy resin is used in high-strength adhesives and as a coating agent for ships and chemical-tank surfaces.