Bt10 bn refinery capacity upgrade headlines BCP’s five-year plan

Corporate August 10, 2017 01:00

By The Nation

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BANGCHAK Corporation (BCP) will devote the lion’s share of a Bt15 billion, five-year investment plan to raising its crude oil refinery capacity to 130,000 barrels a day by 2020 from 135,000 barrels now.

Pongchai Chaichirawiwat, chief operation officer and senior executive vice president at BCP, said the outlay for the refining capacity upgrade would come to Bt10 billion, accounting for most of the investment budget in the five-year |plan.

Pongchai said a study into how to proceed with the capacity upgrade was under way, with an environmental impact assessment report being prepared, before licences are sought from the Department of Industrial Works.

The upgrade is part of BCP's efforts to improve the efficiency of its refining operations in a bid to generate higher returns, he said. 

Now, 20 per cent of the total capacity at BCP’s refinery is for gasoline, with more than 50 per cent for diesel, 10 per cent for jet fuel and 8-9 per cent for fuel oil.

Once the planned capacity expansion is completed, the proportion of gasoline and jet fuel refined will be slightly increased, Pongchai said.

From March to April, the company hit its historical high of refining output at 121,000 barrels per day, surpassing its capacity ceiling of 120,000 barrels a day, given a satisfactory gross refining margin (GRM) and fuel oil price as well as rising domestic demand for oil, Pongchai said.

Refining output in the second quarter averaged 115,000 barrels, slightly higher than in the first quarter, while the second-quarter GRM - excluding impacts from higher crude stocks - would likely be better than the first-quarter figure, he said.

As April-May was a period for travel and agricultural harvesting, demand for oil went up, which boosted the average GRM to US$6.60 per barrel in the first and second quarters of this year, Pongchai said.

Floods affect demand

In the third quarter of this year, crude refinery output is forecast to come in slightly lower at 110,000 barrels per day due to the rainy season and the recent floods, factors which could prompt lower demand for oil, he said. 

However, the GRM will likely rise to $7 per barrel from a typical range of $5-$6 per barrel due to expected higher demand for oil in Asia, particularly China and India, he said.

“This year's refinery output is expected to reach its target of 111,000 barrels per day and the output could touch 115,000 barrels per day at the end of this year,” he said. Last year, this was slightly above 100,000 barrels per day.

For the first five months of this year, BCP's sales of all oil types inched up 1.7 per cent, down from 7 per cent in the same period of last year due to this year's higher crude prices and the increased use of oil by users of liquefied petroleum gas (LPG) and natural gas vehicles (NGV).

The company's diesel sales edged up 1.3 per cent for the first five months, while gasoline sales rose 2.6 per cent.

BCP’s share of the country’s oil sales for the period was 15.2-15.3 per cent. Last year, its share was 15 per cent. The company expects crude price is projected to stay in a range of US$50-$55 a barrel this year.