Thai downstream plans further integration

The Asian economic downturn is causing upheaval in Thailand's downstream industry.

Thai Olefins Co. (TOC) shareholders-including Petroleum Authority of Thailand (PTT), National Petrochemical plc, Siam Cement, and Thai Petrochemical Industry-are unable to pay $75 million for a planned production capacity hike at TOC's Rayong olefins complex. The expansion would have increased capacity to 481,000 metric tons/year from 385,000 tons/year and cut production costs to $362/ton from $422/ton.

Meanwhile, Thailand's two new oil refineries, already being integrated to cut costs, might be tied in with a world-class aromatics complex planned by Chevron Corp. and PTT.

Olefins problem

Pala Sookawesh, acting president of TOC and a PTT governor, warned that without the expansion TOC cannot compete with olefins producers in Singapore, South Korea, and Japan, who have upgraded their facilities to ensure lower production costs.

The TOC chief sees hope, however, in the fact that Japan's Itochu Corp. and Indonesia's Indo Rama have expressed "keen interest" in buying shares in a stock issue planned by TOC. Their participation in TOC, now under discussion with PTT, would lead to purchase of olefins from TOC.

TOC has increased export of olefins from Rayong due to reduced domestic demand for polymers caused by Thailand's economic recession and high inventories carried over from last year. Most of TOC's exports went to Asian countries, notably China, South Korea, and India.

Refinery integration

Rayong Refinery Co. (RRC) and nearby Star Petroleum Refining Co. (SPRC), which have parent companies Royal Dutch/Shell and Caltex Petroleum Corp., respectively, recently announced a plan to integrate (OGJ, Mar. 2, 1998, p. 56). Now the parties involved have begun discussing integrating a $700 million aromatics plant with the two refineries. The aromatics plant is to be built by the Chevron-PTT combine.

The move mirrors other initiatives by refiners in this region, notably in Singapore, which have started to tie in new petrochemical plants to enhance their returns.

SPRC Managing Director Don Romano confirmed that discussions on the future integration of the Chevron-PTT aromatics complex and with the SPRC and RRC refineries are under way.

The Chevron-PTT aromatics complex, owned 60% by Chevron and 40% by PTT, will have the capacity to produce 675,000 tons/year of paraxylene, 600,000 tons/year of benzene, and 638,000 tons/year of raffinates. The plant is scheduled to come on stream in mid-2000.

About 80% of the plant's production is earmarked for the Asia-Pacific region, particularly China, South Korea, and Taiwan. The rest will be marketed locally.

Romano said the alliance of RRC and SPRC, called Refco, will have the chance to supply feedstocks such as light naphtha to the Chevron-PTT aromatics complex, which will be next to the SPRC refinery. PTT says sharing facilities will save the aromatics plant $100 million.

Esso Thailand plc recently announced that a new $400 million aromatics complex will form an integral part of its existing 145,000 b/d oil refinery in Sri Racha. The Esso plant will produce 350,000 tons/year of paraxylene.