Oil-refining margin still quite high

Oil-refining margin still quite high.

The average oil-refining margin this year is expected to stand at about US$4 to $5 (Bt144 to Bt180) per barrel, which is still relatively high due to limited refinery capacity and growing global demand.

Chainoi Puankosoom, managing director of Rayong Refinery and chairman of the Federation of Thai Industries' refinery club, yesterday said the industry was still in an up-cycle due to tight supply. However, the refining margin would not be as high as 2006's $8-$10 per barrel.

He expects refining prices to remain high due to the persistent economic growth of China and India, which will maintain the demand for finished oil products.

Meanwhile, new refineries may not commence operations this year, as a new one in the Middle East is expected to be completed in 2010, not 2009 as earlier scheduled.

Chainoi said the terms of the merger between Star Refining and Aromatics (Thailand) should be completed this quarter.

"We're at the stage of considering the technical issue: whether the two companies should be totally merged, or just limit the partnership to the consolidation of the product pool. Both options would result in lower operating costs. If the merger option is chosen, it should be completed in six months," he added.

The relatively high margin means domestic retail prices will not be much lower than last year's. This is in line with the government's aim to promote alternative fuels. Chaiwat Choorit, senior executive vice president of PTT, said recently his company would this month start negotiations for the purchase of the next batch of ethanol to sustain its distribution of gasohol. He said the existing supply would run out at the end of the month and the new lot should be quoted at Bt20 per litre, based on the Brazilian price and other expenses. The last lot was quoted at Bt25.30.

The Nation
Thursday January 11, 2007