IRPC Plc, a SET-listed integrated petrochemicals maker, is maintaining its average gross integrated margin (GIM) projection at US$8 a barrel this year despite a downtrend in the oil refining business in the second half.
President Sukrit Surabotsopon said the spreads for crude oil and refined oil products are expected to narrow in the second half, as declining demand for marine logistics in Asia-Pacific is pushing down diesel demand throughout the region.
The spreads of crude oil and diesel were within a range of $15-$18 a barrel last year but has narrowed to $12, while that for bunker oil for marine transport has also declined to $10 from more than $12.
New oil refineries in China and India are expected to start operating this year and next, which will further reduce the gap in crude and refined oil spreads.
On the other hand, existing refineries in Australia and Japan are expected to shut down.
But Mr Sukrit said the new supply from China and India would mainly affect refineries that did not have a petrochemical unit.
"Petrochemical demand is still rising in this region, helping to offset lower gross margins in oil refining," he said.
This year, IRPC is set to spend 38.4 billion baht on six projects scheduled to operate between now and 2016.
The investment will drive its GIM to grow by $2-4 a barrel after next year for downstream petrochemical products.
Mr Sukrit said his company was studying the feasibility of producing biodiesel and high-value petrochemical products on the aromatic chain.
These would include polyols, stylene monomers and acrylic acids for a combined investment of 65.2 billion baht.
If determined to be worthwhile, the projects could commence in 2017 and 2018.
IRPC's ongoing Phoenix and Delta projects are aimed at upgrading its petrochemical units and reducing dependence on revenue from commodity-grade polymers.
IRPC shares closed yesterday on the SET at 3.38 baht, up two satang, in trade worth 67.8 million baht.