SET-listed Thai Oil Plc (TOP), Thailand's largest oil refiner, is still on track to expand its capacity by another 100,000 tonnes to add value to its bunker oil by converting it into petrol, said Atikom Terbsiri, the president and chief executive.
However, the plan is expected to be slightly delayed as the project to build up a new fourth crude distillation unit (CDU) is still undergoing a feasibility study, he said.
"The project is being evaluated. We are looking into the engineering details, costs and investment worthiness," Mr Atikom told the Bangkok Post.
The project was previously expected to be finalised by the end of this year.
"The study is due to be finalised early next year, with construction expected to start in the second quarter or early third quarter of next year," he said.
The investment cost is around 35 billion baht as the project aims to not only increase the company's refining capacity, but also increase its refining efficiency to produce cheap bunker oil for making other higher-value products such as diesel and jet fuel, the demand for which is rising.
Thai Oil has a refining capacity of 275,000 to 300,000 barrels per day. Of the total, 7-9% is bunker oil, or around 20,000 barrels per day.
"When the new CDU is built, we will produce higher-value petrol," said Mr Atikom. The new unit will increase refining capacity to 400,000 barrels per day.
He said gross refining margin was expected to remain high at around US$8 a barrel, which allows the company to make a profit.
Now is the right time for Thai Oil to start investing and expand refining capacity as global oil prices remain low, which helps with construction and production costs, said Mr Atikom. The higher capacity after expansion should meet rising projected demand levels, he said.
The company expects global oil prices to stay in a range of $45-50 a barrel, rising to $50-55 next year.
Thai Oil posted a net profit of 7.8 billion baht in the second quarter this year, up from 4.7 billion year-on-year.
TOP shares closed Friday on the SET at 68.75 baht, up one baht, in trade worth 667 million baht.