PTT's plan with projects

PTT suspends merger plans Group awaits outcome of Map Ta Phut case A planned merger of four PTT Group petrochemical and refining units has been delayed pending a court settlement on the ongoing Map Ta Phut dispute, a senior executive says. The merger has been delayed until the court outlines clear environmental enforcement guidelines for 76 suspended industrial projects, worth about 400 billion baht, in Rayong’s Map Ta Phut Industrial Estate, said Prajya Phinyawat, chief operating officer of PTT’s downstream petroleum business group. Of the 76 suspended projects, 25 ventures, worth about 130 billion baht in total, belong to PTT and its affiliates. PTT has been studying the possible merger of PTT Chemical Plc (PTTCH), IRPC Plc, PTT Aromatics and Aromatics and Refining Plc (PTTAR) and Thai Oil Plc (TOP). The plan, which was originally to be finalised in October, was pushed back to the year-end. But Mr Prajya said the merger would now not be concluded until the court sets clear compliance guidelines for the projects. “How can we decide which formula is most suitable for the merger until we know what is going to happen with their operations [once the verdict is made]?” he said yesterday. “The merger will proceed immediately after we know what we have to do to comply with the court’s order.” PTTCH, meanwhile, has been in talks to acquire petrochemical projects in neighbouring countries, said president and CEO Veerasak Kositpaisal. Negotiations with petrochemical manufacturers in Southeast Asia are expected to conclude next year. The company has the capacity to raise up to 60 billion baht in funds to finance investments over the next five years, he said. Asean will integrate into a single production base by eliminating tariffs on petrochemical products traded within the region next year. Asean market integration will pave the way for better access for PTTCH products to markets such as Indonesia, the Philippines, Malaysia and Vietnam. Mr Veerasak said acquiring existing assets in Asean was appropriate for PTTCH to integrate its operations as key petrochemical products are expected to swell when new capacity, mainly from the Middle East and China, come online starting next year. At the same time, PTTCH has prepared a contingency plan in case PTT’s sixth gas-separation plant – one of the suspended projects in Map Ta Phut – has to be delayed beyond its scheduled operational target of the first quarter next year. The $780-million gas-separation plant is considered vital to the operation of PTTCH’s cracker plant which is targeted to start commissioning in late December, he said. PTT’s chief financial officer Tevin Vongvanich said if, in the worst case, the sixth gas plant cannot proceed, 300 million cubic feet per day of local supply will evaporate, forcing Thailand to import more liquefied petroleum gas. PTT projects crude oil price to move in a range of $65 to $75 per barrel in the final quarter, with Dubai crude now trading above $70, he said. The gross refining margin is expected to edge down from $1.70 a barrel in the third quarter while petrochemical prices will also weaken. “Fortunately, the spread margin has declined less than we anticipated while the demand has improved in line with the global economy,” he said. Consequently, PTT is likely to report better-than-expected profit this year, possibly higher than the 51.7 billion baht posted in 2008, but total revenue will fall below last year’s 2 trillion baht. Shares of PTT closed yesterday on the Stock Exchange of Thailand at 233 baht, down six baht, in trade worth 1.03 billion baht. PTTCH declined 1.25 baht to 70.75, in turnover worth 206.4 million baht. ฺํBY Bangkok Post 20/11/09