TOP to propose Clean Fuel Project to shareholders

Thai Oil Plc (TOP), Thailand’s biggest oil refiner by capacity, plans to seek approval for a massive investment in the Clean Fuel Project (CFP) from its shareholders on Aug 25 at the annual general meeting.

According to president and chief executive Atikom Terbsiri, the investment budget will be US$4.83 billion (161 billion baht), aimed at expanding refining capacity to 400,000 barrels per day from 275,000 at present.

TOP’s board of executives already approved and decided on the final investment on June 29.

Mr Atikom said the CFP will enable TOP to receive a variety of crude oil resources from around the world, not just from the Middle East.

The project aims to switch from refining crude oil with low margins to products with higher margins, including diesel and jet fuel, while low-margin products such as bunker oil will gradually be reduced until they represent 7% of Thai Oil’s margin.

The CFP will also enlarge its oil refining margin to 15 billion baht a year, due to the shift from heavy crude oil to light crude.

The additional expansion capacity for TOP’s oil refinery will be on 1,500 rai near its existing site in Sri Racha district, Chon Buri province. The land was approved for a long-term lease from the Treasury Department by the cabinet in June.

The land will be leased for 12 billion baht under a 30-year contact.

TOP expects initial capital spending for the CFP to come from cash on hand, estimated at 80 billion baht, while the remaining budget of roughly 80 billion baht has yet to be allocated to either debenture issuance or loans from commercial banks.

At the shareholders’ meeting, TOP will schedule its auction to award engineering, procurement and construction contracts for the CPF.

The company is also seeking investment privileges from the Board of Investment because the CPF is in Chon Buri, one of the Eastern Economic Corridor (EEC) provinces.

“Any investment projects in the EEC provinces will receive the highest privileges,” Mr Atikom said. “The tentative schedule for the CPF’s construction will start next May, while commercial operations are set for 2023, unless any obstacles prolong the project.”

The CPF excludes additional spending on a combined-cycle power plant that has been tentatively designed to fire crude oil residue into the power plant.

The power plant is set for initial investment, after which TOP will decide whether to transfer the plant to Global Power Synergy Plc, a sister company.

The plant will be an independent power supply only for oil refinery operations, without sales to the national grid.

Mr Atikom said gross refining margins in 2018 are expected to equal last year’s at an average of $5.90 per barrel thanks to increasing global oil prices averaging $70-75 per barrel.

The CFP will enable TOP to receive a variety of crude oil resources from around the world. ATIKOM TERBSIRI President and chief executive, Thai Oil