PTT Global Chemical (PTTGC), Thailand's largest petrochemical manufacturer by capacity, has revised its 2018 revenue forecast to 480 billion baht, a 14% growth rate, in response to the upside in global oil price trends.
Duangkamol Settanung, executive vice-president for finance and accounting, said PTTGC's previous estimate was based on an average Dubai crude oil price of US$52 per barrel in 2018, but the price as of last week was nearing $70.
"The higher the oil price rises, the more returns the company will receive thanks to the spread between crude oil and petrochemical products. This has prompted PTTGC to change its performance outlook," she said.
The company will disclose its official revenue prospects within the first quarter this year, said Ms Duangkamol.
She said the company will monitor movement of oil prices because they affect the resumption of oil and gas production in North America.
"If the price moves above $70 for a long time, production of shale oil and shale gas, which have been suspended since 2014, may resume as cost of production stands above $70 [per barrel]."
Ms Duangkamol said other unconventional oil and gas resources may resume production, including oil sands and deep-sea oil resources.
She said the price of crude oil has signalled a rise in petrochemical prices such as high-density polyethylene (HDPE), which is at $1,300 per tonnes, up from $1,170 in December, higher than PTTGC's former estimation of $1,133.
The spread between naphtha and HDPE stands at $650 per tonnes, 10% higher than mid-2017.
Ms Duangkamol said the petrochemical sector in Asia is trending upwards because no new production facilities in these countries will be completed in 2018, but demand is growing.
The capacity utilisation of PTTGC's production base in Rayong's Map Ta Phut district for the aromatics production line is at 91% on the average in January, up from last year at 80%, while the olefins production line is at 99%, from 96% last year.
Ms Duangkamol said additional revenue also comes from asset acquisitions in six subsidiary firms since the third quarter of last year and they are expected to operate at full capacity this year.
"[The acquisitions] will double revenue to 6 billion baht this year from 3 billion last year," she said.
PTTGC has maintained its capital expenditure over the next five years to 2021 at 180 billion baht, mostly allocated to the naphtha cracker "Retrofit Project", which is worth almost 100 billion baht.
The cracker will be able to produce 500,000 tonnes per year of ethylene and 261,000 tonnes of propylene.
PTTGC president and chief executive Supattanapong Punmeechaow said the project will process naphtha products into feed stock for olefins.
PTTGC shares closed yesterday on the SET at 96.50 baht, up 2.50 baht, in trade worth 1.96 billion baht.