IRPC revisits Beyond Everest over profitability

Delay likely on project’s final investment decision

IRPC Plc, a petrochemical arm of national oil and gas conglomerate PTT Plc, is revising its capital expenditure under the Beyond Everest project, saying it found the project unviable in terms of investment return.

President Sukrit Surabotsopon said IRPC may delay the final investment decision to the first quarter next year from the previous deadline of end-September, because a major part of the project needs to be revised.

The Beyond Everest project entails boosting production capacity of ethylene to 560,000 tonnes per year at the company’s existing production facility in Rayong, whose current capacity is 400,000 tonnes. The project further outlines a paraxylene production facility with capacity of 900,000 tonnes annually, on top of an additional 200,000 tonnes of benzene.

Previously, the Beyond Everest project was estimated to cost US$1.2 billion (40 billion baht). Of that total, $400 million was earmarked for revamping IRPC’s ethylene production facility.

Mr Sukrit said the budget for revamping the ethylene unit should be cut down to $200-300 million. That revision is expected to make the internal rate of return (IRR) more than 14%.

But a major part of the capex of Beyond Everest has been allotted for the paraxylene production facility, estimated to cost $900 million to $1 billion. The facility’s IRR is still worthwhile in that price range, allowing the project to go forward even as the revision plan gets under way for the ethylene project.

He said IRPC is selecting the appropriate technology for the development of paraxylene, expected to be finalised by the first quarter next year.

The Beyond Everest project aims to increase production of olefins and aromatics, which are high-value products, while reducing the production of low-price, commodity grade petrochemical products.

Mr Sukrit said IRPC forecasts its best business performance in earnings before interest tax and depreciation amortisation this year, thanks to the full-year operations of the upstream project for hygiene and value-added products.

The Beyond Everest project is now awaiting approval from the company’s executive board and is expected to be completed by 2021. After its implementation, IRPC’s gross integrated margin would rise beyond US$20 a barrel, against $14.3 in the first half of this year, Mr Sukrit said.

IRPC shares closed yesterday on the SET at 6.05 baht, up 10 satang, in trade worth 597 million baht.