Bangchak Petroleum Plc (BCP), the majority state-owned oil refiner, is to invest 10 billion baht to develop a fully integrated alternative fuels complex in order to diversify risk from the oil refining business.

President Anusorn Saengnimnuan said the company has earmarked a budget of 10 billion baht for investment from 2008 to 2012.

This will include developing a one-billion-baht plant for B100, or 100% biofuel, which is due to come online in mid-2009 with an initial daily capacity of 300,000 litres.

An additional 600 million baht will be injected to double the B100 project's capacity to 600,000 litres.

Bangchak will also invest in a facility to upgrade glycerin, a B100 byproduct, to supply the cosmetics industry and it aims to develop palm plantations to supply raw materials for a fully integrated biofuel operation.

Ethanol also features in its plans, pending a comparative study between refining from sugarcane juice and cassava.

The investment strategy comes after Bangchak in the second quarter recorded its highest-ever gross refinery margin (GRM) of US$15 a barrel _ up from $12 in the first quarter and $6.80 a year ago.

Bangchak senior executive vice-president Patiparn Sukorndhaman said the record margin came from inventory gains as crude prices climbed steeply almost every day. ''Due to heavy fluctuations, the spread from Dubai crude to Singapore refined-oil prices leapt to $45 a barrel from the normal spread of around 15-17% of refined-oil prices,'' said Mr Patiparn.

Consolidated net profit more than doubled to 1.8 billion baht from 881 million baht a year earlier. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose to one billion baht from 595 million baht.

Mr Patiparn said that Bangchak's oil refinery utilisation also jumped to a five-year high of 83,600 barrels per day, compared to an average output of 73,800 barrels per day last year. However, its retail oil business recorded its worst-ever results, slumping from a profit of 0.25 baht per litre in 2007 to a loss of 0.74 baht a litre as Bangchak held back pump price increases in line with the policies of its parent, PTT Plc.

But retail oil sales volume was also at a record level _ up to 44,400 barrels per day from 38,200 barrels in 2007.

Acting senior vice-president Yodphot Wongrukmit said Bangchak now had the second largest share of the country's retail market, up from 12.8% last year to 14.6% _ behind only PTT, the market leader with 40% of the market.

Bangchak has now overtaken Royal Dutch Shell and ExxonMobil to rise from being the kingdom's fourth largest oil retail business. Currently, ExxonMobil is ranked third with a 14.1% market share and Shell is in fourth place with 13%.

Mr Yodphot said aggressive promotion of its green fuels, gasohol and biodiesel, was the main factor behind Bangchak's rising market share.

The margins for alternative fuels are two baht a litre for gasohol and 0.50 baht for biodiesel, compared with 1.30 to 1.60 baht for petrol and minus 0.04 baht for high-speed diesel.

BCP shares closed yesterday on the Stock Exchange of Thailand at 10.10 baht, down 10 satang, in trade worth 164,000 baht.

Bangkok Post, 28.08.2008

Home :: Back :: Next