Thai Oil to open Clean Fuel Products bidding

Thai Oil to open Clean Fuel Products bidding

Thai Oil Plc (TOP), the country's biggest oil refiner in terms of capacity,
is expected to open bidding in the second quarter for an engineering,
procurement and construction firm (EPC) to upgrade its existing refinery and
oversee expanded capacity.

The upgrade and expansion are worth a combined US$3.7 billion (136.4 billion
baht), said president and chief executive Atikom Terbsiri.

The project is named Clean Fuel Products, which aims to switch from refining
heavy oil with low margins to producing more higher-margin products,
including diesel and jet fuel.

Thai Oil further plans to gradually cut production of low-margin heavy oil
like bunker oil, which currently accounts for 7% of total production.

According to the plan, Thai Oil will increase its refining capacity to
400,000 barrels a day, up from 275,000. The expanded capacity will require
expansion of its refinery area in Sri Racha by an additional 200 rai.

The new oil refinery unit is set to cut operating costs sharply, while
helping increase the crude premium to be in the range of $3-4 a barrel.

All documents for the international tender are due to be finalised and
approved by the company's executive board by March, said Mr Atikom.

Last year, London-based Amec Foster Wheeler won Thai Oil's front-end
engineering design contract.

Once the bidding process wraps up, the winning EPC will begin work this
year. Commercial operations are expected to start in 2021-22.

"The capital expenditure for our oil refinery revamp constitutes our largest
budget since 1995, when Thai Oil expanded capacity from 175,000 barrels a
day to 275,000," he said.

As a result, the company's two ageing crude distillation units will be
replaced with upgraded ones.

The upgraded refinery units will allow Thai Oil to source crude from many
different sources instead of buying crude from a single source, helping it
generate better margins, said Mr Atikom.

Half the total investment budget for the project -- 60 billion baht -- will
come from cash on hand, while the rest will come from banks loans and
debenture issuance.

Last week, Thai Oil announced that this year's capital expenditure of 6
billion baht had primarily been earmarked for capacity expansion of its
crude oil tanks, jetties and oil truck loading system. Other funds have been
allocated for the development of new offices at its refinery complex in Sri
Racha, Chon Buri province.

TOP shares closed yesterday on the Stock Exchange of Thailand at 72.25 baht,
down one baht, in trade worth 235.6 million baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1198777/thai-oil-to-open-clean-fuel
-products-bidding

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com