THAI OIL Plc (TOP) will invest about US$5.16 billion (Bt168 billion) for five years starting next year, while planning to spend $1.37 billion in the first quarter of next year on a clean fuel project (CFP).
Atikom Terbsiri, chief executive officer and president of TOP, said that about $4.7 billion, or 90 per cent of the five-year $5.16-billion plan, would be spent on CFP, a project that will improve refinery efficiency and raise crude oil refining capacity to 400,000 barrels per day in 2023. The current refining capacity is 270,000 barrels per day.
The remaining 10 per cent, or about $400-$500 million, will be used to finance extension projects which will develop infrastructure for the CFP. Such projects extend from ports, more crude storage tanks and office relocation.
The investments will come from the remaining cash of about Bt60 billion to Bt70 billion and a debenture issue of about Bt32 billion.
Atikom said the company has enough capital to fund the investment and does not see the need to raise capital.
The CFP will not only add value to oil products, but also upgrade fuel oil to more jet oil and diesel, he said.
The company’s jet oil and diesel will account for 70 per cent of revenue in the future compared to the existing 60 per cent, while gasoline revenue will drop to 15 per cent. Once the CFP is completed, the country will not need to import jet oil for five to 10 years.
The planned $651-million 250-megawatt power plan, as part of the CFP, is now in the process of negotiations with Global Power Plc (GPSC), a part of the PTT Group.
Atikom said that next year, Dubai crude price is expected to average $70-$75 per barrel. He also cited developments in the US-China trade war, uncertainty over the stance of Opec and non-Opec countries and the Federal Reserve’s estimated benchmark rate rises.
Next year, TOP forecasts gross integrated margin (GIM), excluding oil stock impact, at $8.9 per barrel, while gross refinery margin (GRM) is projected at $6.7 per barrel for an estimated rise in oil demand following economic expansion and a drop in Opec’s crude production capacity. This year’s GIM and GRM are anticipated at $6.9 per barrel and $4.7 per barrel, respectively.
The refining utilisation rate is estimated at 103 per cent next year, down from this year’s 111-112 per cent, given the additional refinery overhaul plan. Meanwhile, the 2019 spread between gasoline 95 and paraxylene (PX) is expected to weaken to $360 per tonne from this year’s average of $380 per tonne, as new global production capacity is gradually added into the system.
“The domestic demand for oil is expected to grow next year following the government’s mega-investment project, while global demand for finished oil is estimated to grow about 1.4 million barrels per day. Thus, demand for diesel is expected to grow 3-4 per cent next year from 1.3 per cent this year, while demand for gasoline is projected to rise 3.8 per cent from 2.6 per cent. Demand for jet oil is expected to increase 3.1 per cent, compared to 5.9 per cent,” Atikom said.
In the fourth quarter of this year, GIM, excluding oil stock impact, is projected at $6.4 per barrel and GRM at $4.1 per barrel, he said. Third-quarter GIM was $7.2 per barrel and GRM $5 per barrel.
For the whole of this year, TOP’s sales are forecast to hit Bt300 billion, down from the previous year’s Bt337 billion following a drop in global crude prices. Estimated net profit will be revised down from last year’s Bt24.9 billion, a record high, due to lower margin.