SET-listed PTT Global Chemical Plc (PTTGC), Thailand's largest petrochemical maker by capacity, has agreed to team up with South Korea's Daelim Group, a construction and petrochemical firm, to develop a US petrochemical complex.
The project was tentatively announced at a cost of $4.5 billion (142 billion baht) at the end of last year and is expected to be the most expensive in PTTGC's history.
PTTGC told the Stock Exchange of Thailand yesterday that the executive board of PTTGC and Daelim had resolved to sign a head of agreement (HOA) for the joint venture.
The HOA signing ceremony is expected to take place in Bangkok soon.
Under the HOA, Daelim will undertake the front-end engineering design and secure funding for the project. PTTGC said the front-end engineering design will cost $100 million.
Both sides will be tasked with selling ethylene derivatives from the US-based plant.
SET-listed PTTGC will invest in the project through its wholly owned subsidiary, PTTGC America LLC, according to the company's US website.
The site of the project, selected last year, is Mead Township, Belmont County, Ohio, near the Marcellus and Utica shale zones.
Other details of the project have yet to be disclosed, but PTTGC spent several years negotiating the partnership, including the raw material supplier and facility location.
Meanwhile, parent firm PTT Plc expects sales of oil products in 2018 to grow 4-5%, compared with 11 billion litres last year.
The company has set a long-term target to increase its market share from 38% to 40% by 2025.
Auttapol Rerkpiboon, chief operating officer for downstream petroleum business group, said PTT has set aside funds for oil and non-oil business to reach that growth target.
The company plans to launch new oil products to stimulate the domestic market, including PTT Ultra Force Diesel.
"The new product was developed by PTT's innovative institute, but we have not spent much on R&D, so the retail diesel price remains unchanged," Mr Auttapol said. "PTT is confident in grabbing more market share from this new diesel product."
The company will launch Ultra Force for the petrol platform in the next three months.
Last December, PTT's executive board approved a 2018 capital budget of 12.2 billion baht, on top of an additional 10 billion each year until 2022 for expansion in oil and non-oil business.
PTT is aiming to operate 1,800 petrol stations by year-end, up from 1,640 last year. That figure is projected to surge to 2,560 by 2022.
PTTGC shares closed yesterday on the SET at 97 baht, down 50 satang, in heavy trade worth 2.33 billion baht.
PTT shares closed yesterday on the SET at 490 baht, down 8 baht, in heavy trade worth 3.98 billion baht.