Thai Oil sales down 10% on flooding

Thai Oil’s fuel sales have dropped 10 per cent because of the severe flooding, but this is unlikely to eat into the firm’s revenue thanks to an expected higher refining margin in the current fourth quarter.
The company’s chief executive officer, Surong Bulakul, said the worst-hit areas – the North and Central regions – were high fuel-consumption areas, so the company’s sales had fallen 10 per cent. The company believes this situation will continue for a few months.
The company has refining capacity of 30 million litres per day, of which 21 million litres are diesel and 9 million litres are 91/95 base oil.
Refining is running at full capacity, the company said.
Declining domestic demand for fuel has been offset by exports, which currently account for 20 per cent of total fuel production.
Thai Oil exports diesel, petrol and bunker oil to Singapore and Indonesia.
Surong believes the company could meet its revenue target this year despite the declining demand, as the refining margin is expected to rise this quarter.
The company expects to post consolidated net profit of Bt12 billion for the third quarter, higher than the same period last year, thanks to increasing revenue from lubricating oil and paraxylene products.
He added that the company’s net profit in the fourth quarter would depend on the global oil price. The average price of Dubai crude this year is expected to hover between US$100 and $105 a barrel.
If the average oil price does not fall below $100 in the current quarter, the company is unlikely to post losses from stock inventories, Surong said.
Further ahead, the company expects positive financial results next year due to projected growth in demand, especially for lube oil. Its paraxylene production capacity will also increase by 100,000 tonnes per year next July from 500,000 tonnes annually.
Thai Oil yesterday inaugurated its refinery unit for Euro 4 gasohol. It can now produce all kinds of fuel under the Euro 4 standard. Thai Oil started producing Euro 4 diesel in June 2009, before expanding to cover Euro 4 petrol.
All of its Euro 4 products enjoy Oil Fund subsidies of 24 satang per litre, but the fund will stop the subsidy next January, meaning the prices of Euro 4 products will have to rise.