Bangchak Petroleum Plc (BCP), the majority state-owned oil refiner, is considering investing 3 billion baht in upgrading its refinery facilities and expanding capacity in order to improve its margin.
BCP president Anusorn Sangnimnuan said the company was conducting a feasibility study to expand refinery output by 10% to 110,000 barrels per day and to upgrade facilities to increase the proportion of high-margin products.
The study is looking into increasing the proportion of high-margin products such as jet fuel and low-sulphur diesel to 65% from 55%, while the rest would be the combined output of low-margin products.
Dr Anusorn said the study would be finished this year. If the board approves the recommendations, construction may begin early next year.
“Competition in the oil refinery business will be getting tougher over the next several years so we need to adjust ourselves to shift to higher margins, especially high-quality diesel and jet fuel, and high-growth markets,” said Dr Anusorn.
The new project would follow a low-sulphur diesel facility now under construction. The one-billion-baht diesel upgrade will be completed next year and begin operation in 2013.
In the longer term, the company plans to upgrade its oil refinery into green-fuel refinery and zero-discharge refinery under a plan now being considered. Bangchak Solar Power (BSE), its green energy arm, is seeking strategic partners to co-invest in the first phase of its solar farm in Lop Buri, requiring 4 billion baht for 38 megawatts of output. It will be fully operational by November.
BSE also plans a second phase of the investment involving a 32-MW solar farm worth 3 billion baht and a 38-MW third phase worth 5 billion baht. These would take several years to materialise.
Bangchak reported a 600% increase in its net profit in the second quarter to 3 billion baht from 432 million a year earlier, with sales rising 30% year-on-year to 42.3 billion.
First-half consolidated net profit was 4.44 billion baht (3.50 baht a share), up from 1.2 billion (1.03 baht a share) in the same period last year.
The impressive growth was largely attributed to a high gross refinery margin of US$7 a barrel during the period coupled with oil stock gains of $5 per barrel, as well as the increase in output to 98,000 barrels per day from 74,000 a year earlier.
“We are confident that in the second half of this year our gross refinery margin will average $5.50 to $6 per barrel with oil prices averaging $107 this year,” said Dr Anusorn.
For the whole year, it expects total sales to rise 10% to 150 billion baht from 136.3 billion last year.
The company today is cutting prices by another 60 satang per litre for all of its petrol products, except E85, which will be cut 30 satang, in the face of declining global oil price.
The new retail prices are 41.84 baht per litre for regular petrol, 36.94 baht for gasohol 95, 34.44 baht for gasohol 91, 32.94 for E20, and 21.92 baht for E85. Diesel remains at 29.99 baht per litre.
Share of BCP closed yesterday on the Stock Exchange of Thailand at 23.30 baht, up 90 satang, in heavy trade worth 1.24 billion baht.