Wednesday, August 22, 2007

Thailand plans biodiesel plant near old capital

Bangchak plans biodiesel plant

B900m facility to be located in Ayutthaya


Bangchak Petroleum Plc plans to invest between 900 million and one billion baht to build a biodiesel plant by the end of this year, according to Patiparn Sukorndhaman, Bangchak's senior executive vice-president. The new plant, with a daily production capacity of 300,000 litres, is scheduled to be completed within 20-23 months.

Mr Patiparn said the plant would be located near Bangchak's existing oil storage facilities in Bang Pa-in, Ayutthaya, to save the company's logistics cost.

Of the total investment, up to 300 million baht would come from the company's capital and the rest from loans, which would lift its debt-to-equity ratio to two times from 0.6 currently.

Bangchak is now the leader in the biodiesel market, with a share of 78.6% of total market volume of 30 million litres per month, followed by PTT Plc with 21.4%.

Mr Patiparn said the company's biodiesel production output rose by 47% to 28.7 million litres per month over the past six months. At 70 satang per litre cheaper than conventional diesel, the alternative fuel will become increasingly popular locally.

In addition, starting in April next year, the government will call on local oil companies to switch all their diesel products to B2, a blend of 2% biodiesel and 98% diesel fuel.

The move would encourage and build up confidence among motorists to use the much cheaper B5 (a blend of 5% biodiesel).

Mr Patiparn said Bangchak forecast its total revenue would grow 15% this year to 107.57 billion baht although its gross refining margin would decline to below US$2.90 per barrel this year on average compared to more than $3 per barrel on average last year.

The revenue growth would be contributed by the company's promising exports of fuel oil, which account for 30% of its total output, to China. This year, it will ship around 25,000 barrels per day of fuels to China, almost double the 14,000 barrels per day last year. The export price is now around $8-10 per barrel.

Nevertheless, the exports would have to be terminated in the fourth quarter when its product quality improvement (PQI) facilities have been completed. The facilities will transform fuel oil into more lucrative lighter fuel products including gasoline and diesel.

Bangchak will shut down two-thirds of its production capacity for 12 days in February next year, which will cause its capacity to decrease to 40,000-50,000 barrels per day from 70,000 barrels currently.

Bangchak now ranks fourth in the local retail market, with a 12.5% share or 180 million litres per month, after PTT (32.9%), Esso (17.5%), and Shell (15.9%).

Bangchak reported first-half profits of 880.6 million baht, down from 907.81 million in the same period the year before. Total revenues fell to 44.56 billion baht in the first half compared with 51.87 billion in the same period last year.

Second-quarter profits were 881 million baht, up from profits of 393 million last year. Revenues fell slightly to 24.37 billion baht in the second quarter compared with 25.16 billion last year.

Earnings before interest, taxes, depreciation and amortisation in the second quarter were 1.44 billion baht, up from 958 million in the same period last year. Refinery earnings rose 172 million baht year-on-year to 1.36 billion baht in the second quarter, while marketing earnings rose 314 million to 82 million in the quarter.

Bangchak shares (BCP) closed yesterday on the Stock Exchange of Thailand at 11.90 baht, down 10 satang, in trade worth 11.19 million baht.

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