Thailand's petrochemical producers are getting a much-needed break on feedstock costs.
A group led by Unocal Thailand Ltd. recently signed a long-term accord to sell the entire production of condensate from its 10 producing gas fields in the Gulf of Thailand to the Petroleum Authority of Thailand (PTT).
Value of the deal is estimated at more than $2.25 billion, based on the supply of 34,000 b/d of condensate under a 15-year contract that took effect Aug. 1, 1998. The condensate price of about $14/bbl is indexed to a marker basket of refined products and from a point where PTT International, a unit of the Thai state oil firm, lifts condensate from the Erawan floating storage facility anchored near Erawan gas field in the Gulf of Thailand.
PTT will dispose of the condensate locally, at first to Aromatics Thailand plc's aromatics complex at Rayong on the eastern seaboard, which calls for supply of 35,000 b/d of condensate feedstock, said PTT International Senior Vice-Pres. Surong Bulakul.
Overall current condensate demand in Thailand-namely by Aromatics Thailand plc, Thai Oil Co., Thai Petrochemical Industry plc, and Rayong Olefins Co.-stands at 100,000 b/d, he added. By purchasing domestic condensate, those petrochemical producers can avoid paying a 1% duty on naphtha that they would otherwise have to import, as well as benefit from transportation savings because of the shorter supply distance.
The condensate will come from gas fields covered by the so-called Unocal I, II, and III gas sales accords with PTT. Previously, condensate produced from these fields was partly sold on international markets and partly to PTT, which had a short-term, year-to-year, lifting deal. Unocal says it also is possible that the company will sell PTT additional volumes of condensate, to be produced from Pailin gas field, also in the Gulf of Thailand and due to come on line in third quarter 1999.
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