Thai Olefins Co. (TOC) plans to launch a $120 million project to nearly double its ethylene cracking capacity while switching its feedstock from naphtha to ethane from natural gas.
The move comes as TOC is on the verge of successfully completing its $328 million debt-restructuring program.
TOC plans
TOC, one of Thailand's three major olefins producers, plans to add about 300,000 tonnes/year of capacity to its existing 385,000 tonne/year complex in the Thai eastern seaboard province of Rayong by the second quarter of 2003, company officials said. In addition to ethylene, the TOC currently has the capacity to produce 190,000 tonnes/year of polypropylene.
Plans are also on tap for TOC to replace a significant portion of its feedstock requirement from naphtha to ethane, processed from indigenous natural gas. With the planned expansion of capacity, the TOC plant would increase its use of ethane to about 500,000 tonnes/year from 200,000 tonnes/year currently.
At present, ethane comprises only 16% of TOC's total feedstock needs. The percentage would rise to 44% with the expansion. The plant, about 220 km southeast of Bangkok, is using about 800,000 tonnes/year of naphtha.
TOC is turning to locally produced ethane because it is cheaper than naphtha to the extent that it could help reduce the cost of TOC production by an estimated $60/tonne. The price of ethane is also more stable, because it less subject to volatility than naphtha, whose prices are rocketing in line with the soaring world oil prices, an official explained.
The ethane supply will come from natural gas separation facilities nearby operated by the Petroleum Authority of Thailand (PTT), the state energy firm that owns a 49% stake in TOC.
A feasibility study for the expansion of TOC capacity is currently under way and is expected to be completed later this year.
TOC hopes to raise funds for the expansion scheme through two possible means: from capital injection by strategic partners or from a public share offering, according to company officials.
TOC management has held talks with several oil firms, including Chevron Corp., about buying part of new TOC share issue. Nothing has resulted from those talks yet.
Bankruptcy status
Creditors of TOC led by Bangkok Bank and the Industrial Bank of Japan in March unanimously endorsed a term sheet for TOC's $328 million debt restructuring plan.
TOC Chairman Gen. Yutthasak Sasiprapa then said the only unresolved tasks left are the final preparation of documents on the accord and the signing of the agreement.
The approved term sheet is in line with the proposal by the PTT board, which was endorsed on Dec. 22, 1999.
Yutthasak said the new terms would significantly enhance the way the company does business, reducing the principal repayment burden by $122 million in the next 4 years, when petrochemical product prices are forecast to rise steadily.
