THAILAND'S DOWNSTREAM PROJECTS PROLIFERATE

Thailand continues to press expansion and modernization of its downstream sector.

Among recent developments:

• Construction of an olefins unit at Thailand's second major petrochemical complex and a worldscale aromatics unit in Thailand is threatened by rising costs.

• Thailand's National Petrochemical Corp. (NPC) let a 9 billion yen contract to Mitsui Engineering & Shipbuilding Co. and C. Itoh & Co. for a dual fuel cogeneration power plant at its Mab Ta Phud, Rayong province, petrochemical complex. The 54,000 kw plant, to be delivered in August 1993, will burn coal and/or fuel oil and have two steam turbine generator packages.

• NPC awarded a $740,000 contract to Beta Engineering & Chemical Corp., Bangkok, for major maintenance of its olefins plant at Mab Ta Phud.

  Maintenance is to include piping modification and cleaning and inspection of pressure vessels and heat exchanger.

• Financing is in place to flash a green light for a $530 million Belgian-Thai joint venture sponsoring a worldscale polyvinyl chloride/vinyl chloride monomer plant in Thailand.

• Work is more than 50% complete on the $345 million second phase expansion of Thai Oil's Sri Racha refinery in Chon Buri province.

• Petroleum Authority of Thailand (PTT) endorsed a plan to install two more natural gas processing plants in Thailand to meet rapidly growing domestic demand for liquefied petroleum gas.

• PTT plans to debottleneck its second gas processing plant at Rayong, now undergoing test runs, to boost ethane and LPG production. The work will be carried out during a 42 day turnaround that was to begin May 20.

• A dispute over damages caused by mercury contamination to PTT's first gas processing plant seems closer to settlement.

RISING COSTS

Thai officials are concerned that unexpectedly high projected construction costs could undermine economics of the petrochemical complex planned near the Sri Racha refinery.

The complex would be Thailand's first using natural gas as a feedstock.

Bids submitted by international contractors for the two plants far exceed preliminary estimates by Thai Olefins Co (TOC) and Aromatics (Thailand) Co. (TAC), project sponsors partly owned by PTT.

Costs quoted by three engineering and construction groups to build the olefins plant on a turnkey basis exceeded TOC's estimate of $500 million by as much as $160 million. Bids by another three groups for the aromatics plant were more than double TAC's $200 million estimate.

For the olefins plant, the Japanese group of Toyo Engineering Corp., Mitsui, and Toyo Thai Corp. submitted the low bid of $594.34 million, compared, with bids of $633.09 million by a combine of Stone & Webster International, Daelim Engineering Co., and Sumitomo Corp. and $660.49 million by a group made up of Foster Wheeler Italiana, M.W. Kellogg Co., and C. Itoh.

For the aromatics plant, a combine of Chiyoda Corp. and Technologie Progetti Lavori SpA bid $422.49 million, JGC Corp. of Japan $448.60 million, and Kellogg $460 million.

RESPONSE TO BIDS

TOC and TAC officials, surprised by the high bids, are now working with their foreign consultants to negotiate with bidders for a substantial cut in tender prices.

They have extended the original schedules for contract awards to allow more time for negotiations with bidders.

The two companies hope to have completed agreements with low bidders before the end of the first half without having to resort to a new round of bids.

Industry sources said uncertainties caused by the Persian Gulf crisis were believed to contribute to the high price quotes.

Further, they said, TOC-TAC cost estimates were based on a precrisis scenario at a time when worldwide plant construction capacity was not perceived as being unduly strained in the near term.

PROJECTS' DETAILS

The aromatics complex is to be built about 65 km east of Bangkok near the Sri Racha refinery, which will supply it with reformate feedstock.

Production will include 31 2,000 metric tons/year of paraxylene, 232,000 tons/year of benzene, 52,000 tons/year of toluene, and 44,000 tons/year of xylene.

To be located near Thailand's first petrochemical complex at Mab Ta Phud, the new olefins plant (NPC-2) will produce 350,000 tons/year of ethylene, 170,000 tons/year of propylene, 99,000 tons/year of mixed C-4 intermediates, and about 600 b/d of pyrolysis gasoline.

Feedstocks will include about 200 b/d of natural gasoline from PTT's nearby gas processing plant, 200,000 tons/year of paraffins from TAC's aromatics plant, and 750,000 tons/year of full range naphtha from domestic refineries or imports.

Start-up of both plants, which will provide feedstocks for about a dozen intermediate and downstream petrochemical units, is scheduled by yearend 1933 or early 1994.

Shareholders of TAC are the partly state owned Thai Oil 40%, Exxon Chemical Eastern Inc. 35%, and PTT 25%.

TOC is owned by PTT 40%, NPC 11 %, and a group of local private investors in the intermediate and downstream plants.

PVC PLANT

Vinythai, a Belgian-Thai venture of Solvay & Cie., Brussels, and Thailand's agroindustrial group Charoen Pokphand, have concluded agreements with a group of international and Thai banks to arrange a $308 million loan package for the PVC-VCM plant.

The agreements ended speculation that Vinythai faced difficulty in convincing potential lenders of the project's viability, given the current state of the petrochemical market.

Chase Manhattan Asia and Credit Lyonnais will provide $226 million in financing. Three Thai commercial banks--Krung Thai Bank, Siam Commercial Bank, and Thai Farmers Bank--will provide as much as $32 million in financing. The balance will come from World Bank affiliate International Finance Corp. with a direct $50 million loan. IFC also will help syndicate the remaining loan facilities.

The three Thai banks also will furnish a $276 million interim loan guarantee needed during plant construction.

Much of the project financing will come in the form of export credits from Belgium and Italy.

The plant, part of NPC-2 at Mab Ta Phud, will include a 135,000 ton/year PVC unit, a 140,000 ton/year VCM unit, and an 87,000 ton/year chlorine electrolysis unit.

The PVC unit is to go on stream in 1992 and the other two units in 1994.

REFINERY PROJECT

Thai Oil earlier this year began installation of major process vessels as part of the second stage expansion (TOC-4) at its Sri Racha refinery.

The project, which got under way in mid-1989, is to be complete in 1992. It will entail boosting refinery crude throughput capacity to 100,000 b/d from the current 90,000 b/d.

Chiyoda is project contractor.

Expansion involves installation of a crude distillation unit and a continuous catalytic regeneration platformer to produce unleaded gasoline, plus related equipment.

Chiyoda last year completed the first stage expansion, a $200 million project that boosted the refinery's crude distillation nameplate capacity to 83,500 b/d from 65,000 b/d and entailed installation of a 32,300 b/d hydrocracker and related facilities.

PROJECTS BOOST PROFITS

Thai Oil Chairman Kasame Chatikavanij cited the addition of the Sri Racha hydrocracker as a key to his company posting record revenues and profits in the fiscal year ended September 1990.

He noted that a $10/bbl spread between resid feeding the hydrocracker and diesel fuel it produced contributed significantly to the refinery's improved margin for the period.

Other factors included the company's efforts to line up big cargoes of crude before the Persian Gulf crisis and the refinery performance of running full out with no unscheduled downtime.

Thai Oil profits jumped 77.81% in the last fiscal year to 489 million baht ($19.56 million) from the prior year on revenues of 30.844 billion baht, up 15.33% from the prior year.

MORE GAS PROCESSING PLANTS

PTT approved plans to hire an engineering consultant to conduct a feasibility study of installing two more gas processing plants to take growing volumes of gas produced in the Gulf of Thailand.

One would be built next to PTT's existing two unit gas processing complex at Rayong and have a capacity of as much as 250 MMcfd. Preliminary cost estimate is $144 million.

The other would be in Khanom district in the southern Thai province of Nakhon Si Thammarat and have a capacity of 200 MMcfd. Preliminary cost estimate is $120 million for the Khanom plant, to treat gas from giant Bongkot field under development by a Total Cie. Francaise des Petroles group in the southeastern portion of the gulf (OGJ, Apr. 29, p. 27).

Both plants would go on stream in the mid-1990s.

Much of Thailand's LPG comes from the Rayong complex which can process as much as 600 MMcfd of gas from fields operated by Unocal Corp. in the central portion of the gulf.

DEBOTTLENECKING EYED

PTT is conducting a feasibility study of debottlenecking its second gas processing plant at Rayong, which Nippon Kokan KK built under a turnkey contract at a cost of $66.9 million.

Point of the study is to determine whether the plant can boost its gas take by 20% to 300 MMcfd to yield more products and absorb increasing production from more Gulf of Thailand fields.

The second unit has a design capacity of 250 MMcfd with yields of 70,000 tons/year of ethane, about 800 b/d of propane and other LPGs, and 62,000 tons/year of natural gasoline.

After commissioning offshore gas compression facilities in August 1990, natural gas deliverability from Unocal Thailand's fields in the Gulf of Thailand jumped by about 9-10% to 620 MMcfd in September.

With additional offshore gas fields in the Unocal III area under development, Unocal will be able to boost deliverability to PTT further to 750 MMcfd starting in 1992 (OGJ, Nov. 26, p. 31).

Construction of the second gas processing plant was completed about 2-3 months be ind schedule because of a shortage of construction materials and workers in Thailand.

DISPUTE STILL ALIVE

PTT's first gas processing unit at Rayong, a 350 MMcfd plant built at the cost of $320 million, started up in 1985.

That plant remains embroiled in a $37.78 million lawsuit PTT filed against Unocal and Toyo Engineering Corp. over alleged damages caused to the plant by mercury contamination.

Unocal and PTT continue to discuss a possible settlement of the dispute.

PTT Gov. Anat Arbhabhirama has said the parties involved now want to reconcile and "share the miseries" that led to extensive damage at the plant.

A Thai court earlier this year rejected Unocal's bid to dismiss the suit on grounds its contract stipulates disputes should be settled by international arbitration rather than the courts.

Unocal is appealing that decision.

The court then set Mar. 1 as the date for a preliminary hearing on the matter, but no court action has been reported since then.

PTT blames Unocal Thailand for supplying mercury contaminated gas from its Gulf of Thailand fields to the processing plaint and TEC for poor construction work on the plant.

The gas plant was shut down for 124 days in June-October 1989 because of what PTT claimed was excessive mercury content in the offshore gas stream. PTT has spent millions of dollars to repair and install mercury extraction equipment to put the troubled plant back on stream.

In its application for dismissal, Unocal said the gas it delivered to PTT was in full compliance with quality specifications contained in the gas sale contracts signed with PTT.

Earlier, PTT accepted a $10 million insurance settlement in compensation for damages to the plant (OGJ, Oct. 22, p. 24).

Copyright 1991 Oil & Gas Journal. All Rights Reserved.