FocusThailand's PTT optimistic on Mab Ta Phut projects restart

24 August 2010 06:26  [Source: ICIS news]

By Pearl Bantillo

A Court order suspended work on petrochemical projects in ThailandSINGAPORE (ICIS)--Southeast Asia’s oil and gas giant PTT is optimistic that all its frozen petrochemical projects in Mab Ta Phut, save one, will be released from suspension by the courts, a company spokesperson said on Tuesday.

The Thai Cabinet is currently assessing the list drafted by the National Environmental Board (NEB) late on Monday, which exempted downstream petrochemical projects among those deemed harmful to the environment.

A number of Mab Ta Phut projects were ordered stopped by a Thai court in September 2009 on environmental grounds, invoking Article 67 of the country's constitution.

“It (cabinet) should approve what the environmental board said,” said the PTT spokesperson.

The Thai Central Administrative Court was expected to decide on Thursday which projects would be subjected to environmental and health impact assessments and which ones would be allowed to start operating, she said.

Expected to be released from suspension is PTT’s sixth gas separation plant, along with the three projects of its affiliate PTT Chemical, namely, the 50,000 tonne/year high-density polyethylene (HDPE) expansion, another 250,000 tonne/year HDPE expansion and its 50,000 tonne/year ethanolamine project.

PTT could easily comply with the requirements of conducting a health and environment impact assessment on the projects since the process was underway, the company spokesperson said.

“We are going to finish it anyway. It’s going to come between September to November,” she added.

PTT Chemical's 95,000 tonne/year monoethylene glycol (MEG) project however, would remain suspended since it falls under the category of “intermediate stream” projects, which are deemed environmentally harmful based on NEB’s list, the spokesperson said.

Nonetheless, PTT intended to complete the health and environmental impact assessment of this plant and submit them to the court for appraisal, she added.

Asked about PTT’s foregone gains because of the stalled projects, the company spokesperson said: “I don’t have the number in my hand at this moment.”

Meanwhile, the Siam Cement Group (SCG), the biggest conglomerate in Thailand, could also heave a sigh of relief with the strong possibility that the suspension at its four projects would be lifted, said Naphat Chantaraserekul, a Bangkok-based analyst at brokerage DBS Vickers.

SCG officials could not be immediately reached for comment.

The projects – a 350,000 tonne/year linear low density polyethytlene (LLDPE) unit, a 220,000 tonne/year specialty elastomers plant, a 90,000 tonne/year methyl methacrylate (MMA) plant and a 20,000 tonne/year cast sheet plant – were expected to be completed by mid-2011, the brokerage said in a note to clients.

“It is a very big step forward in the Mab Ta Phut case. The only thing is we have to wait for the official document, which will be released in two days,” said Chantaraserekul.

“What happens next is that the companies that have projects under suspension would have to go to court and ask [the projects] to be removed from the suspension list,” he added.

The process could take two to three months to complete, which meant that commercial production at PTT’s stalled projects would likely happen by the year-end, the DBS Vickers analyst said.

“This is sooner than the market expected,” he said, citing that the consensus forecast was for production for the projects to be possible only in the first quarter of 2011.

While the NEB announcement had removed the overhang issues on the companies’ stocks, “we see growing concerns about government intervention that will weigh down on PTT’s share price in the near-term”, Chantaraserekul said.

At 12.11 hours Singapore time (0511 GMT), PTT was down 1.52% at baht (Bht) 260, PTT Chemical was 1.44% lower at Bht103, while Siam Cement was down 0.37% at Bht271.

($1 = €0.79)

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Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections

By: Pearl Bantillo
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