InterviewThai PTT sees delay in planned cracker

24 November 2008 05:07  [Source: ICIS news]

By Pearl Bantillo

 

SINGAPORE (ICIS news)--Thailand’s state-owned oil major PTT Plc expects a delay in the start up of its planned 600,000-1m tonne/year naphtha cracker in 2012 due to financing difficulties, a high-ranking company official said on Monday.

 

The project may cost about $1bn, half of which will need to be obtained from financial institutions as was the usual practice when the company undertakes major investments, said PTT senior vice-president K Pailin Chuchottaworn.

 

“To secure half-billion (US dollar) financing today, I think, is maybe not very possible. This is the real challenge at the moment. The financial markets, they don’t have the appetite at all,” Chuchottaworn said.

 

Construction of the ethylene project was initially scheduled in 2010 at Map Ta Phut Industrial Estate in the country’s Rayong province.

 

PTT remained upbeat on the long-term prospects for the petrochemical sector despite some recent setbacks, and still hoped the naphtha cracker’s start-up would be possible four years from now, he said.

 

Its other major project - a 1m tonne/year ethane cracker was on track to commence operations by the end of 2009, with downstream plants coming on stream in sequence from next year until early-2010, Chuchottaworn said.

 

“We are still very cautious,” he said, citing that PTT is monitoring the markets to see what the situation will be like by the time facility is started up one year from now.

 

Chuchottaworn said he expected the share of the petrochemical segment in PTT’s total profitability would fall this year, as most product values fell in tandem with crude prices in recent months as demand softened amid recession fears.

 

“Our petrochemical refining used to have a quarter share of contribution to PTT profit, but that would be reduced drastically,” he said. A decline in the segment’s share to just about 10% would be a “good guess”, he added.

 

The PTT Group has eight subsidiaries engaged in a wide range of petrochemical business from upstream of olefins and aromatics, the intermediate and downstream of polymers and specialty chemicals, according to its website.

 

“Our (group) profit will not be as healthy as last year but (will) still (be) in a very good range. I can say that it will not be a disappointment,” Chuchottaworn said.

 

PTT reported a 27% decline in third-quarter net profit to Thai Baht (Bt) 17bn ($484m). Profits for the first nine months were barely up from a year ago to Bt73.9bn from Bt73.3bn, with expectations that exports would further slow in the fourth quarter.

 

“Our (2008 group) profit will not be as healthy as last year but (will) still (be) in a very good range. I can say that it will not be a disappointment,” Chuchottaworn said.

 

Petrochemical product prices continued to tumble due to weakening demand, but there were some positive leads in the polyolefins markets.

Chuchottaworn said the polyolefins markets have recovered immediately after the announcement of a fiscal stimulus package in China. “There were new orders coming back, reliev(ing) our inventories,” he said.

 

“I think for polyolefins, I am 80% confident that we already hit bottom so next year, hopefully, we can start anew and the market will be more stable than this year,” Chuchottaworn said.

 

He said the same could not be said for the aromatics markets, but they should be close to bottoming. “There is a very few room for further downward (movement),” he said.

 

($1 = Bt35.14)

 

Please visit the complete ICIS plants and projects database

To discuss issues facing the chemical industry go to ICIS connect

By: Pearl Bantillo
+65 6780 4359

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 29 October 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Links posted in this story:

• Ethylene