State-owned oil and gas conglomerate PTT plans to reduce overall petroleum refinery capacity by 15-25% next month, as domestic demand for jet fuel dries up with most flights grounded, while many people are staying home and not driving.
PTT’s oil refinery firms include PTT Global Chemical (PTTGC), IRPC and Thai Oil, who together total 770,000 barrels per day (BPD), or 62% of the total refinery output in Thailand of 1,234,000 BPD from six oil refineries.
PTT president Chansin Treenuchagron said the cut to refined oil output is expected to begin next month and each firm will consider its own decrease because some firms provide oil for petrochemical production and plastics, which have not been significantly affected by the crisis.
“This plan maintains high liquidity for the group amid the collapse of oil demand and prices across the globe,” Mr Chansin said.
The group revised the Dubai crude oil price average this year to US$30-40 from $55-65 per barrel before the pandemic occurred.
The average last year was $63.25 per barrel.
He said the negative impact of lockdowns across the globe may last until the end of the second quarter.
Mr Chansin said the group is also considering delaying capital expenditure for an olefins cracker production plant in the US under petrochemicals arm PTTGC, which requires 200 billion baht over five years.
PTTGC is Thailand’s largest petrochemical producer and plans to make olefin cracker at Mead Township in Belmont County, Ohio, with an annual capacity of 1.5 million tonnes.
PTTGC planned to make the investment through subsidiary PTTGC America, using an investment budget of 150-200 billion baht.
The project was revised as IRPC, another petrochemicals arm, recently delaying development of the Maximum Aromatics Project (MARS), which had a planned investment of $1.3 billion.
The final investment decision on MARS will be made in mid-2020.
The project includes an annual capacity of paraxylene at 1.3 million tonnes and benzene at 500,000 tonnes.
He said fierce market competition and new aromatics capacity in China caused IRPC and PTTGC to postpone their projects.
The production cut is part of a cash maintenance plan after the group cut operation expenditures by several billion baht.