PTTGC expects 2014 revenue to match this year's level

PTT Global Chemical ex-pects that its 2014 revenue will be close to this year’s, despite the expected drop in the prices of crude oil and of its products, says chief executive officer Bowon Vongsinudom.

Regarding PTTGC’s refinery business, he expects that next year the average price of crude oil will drop slightly to US$102 per barrel from the estimated average of $106 this year.

In the aromatics business, in the second half of this year the price spread of paraxylene is expected to fall slightly from the first half but the benzene spread is expected still to be good. But next year the spreads of paraxylene and benzene are expected to drop because of rising supply. 

He said that overall the com-pany’s revenue next year was expected to be close to what it forecasts for this year, and he does not think there will be any incident that could affect the company’s income.

He added that the PTTGC’s collaboration with Sinochem in exploring business opportunities in China had shown a lot of progress. It has expanded from a joint study of the plastic-pellet market in China to discussion of possible joint investment on the establishment of a plastic-pellet plant there. The discussion is expected to be wrapped up late this year. 

PTTGC will also get clearer details on a planned joint venture with Indonesia’s Pertamina to in-vest in a petrochemical complex, which is expected to cost $4 billion to $5 billion (Bt125 billion to Bt157 billion). The two companies are expected to sign the JV agreement this year.

Bowon said that apart from its overseas interests, PTTGC had invested Bt7 billion annually on business development in the domestic market. The company is committed to growing revenue every year.

He said that this year the company had experienced three major unexpected incidents that affected its revenue and profit. These were preliminarily estimated to cost the company Bt2.4 billion. 

One of these occurred at its low-density polyethelene-pellet plant, which just started operation late last year. It suffered a technical glitch that required repair and maintenance of the plant in July. Those repairs have been completed, but hit net profit to the tune of Bt600 million.

Then came the oil leak off Rayong in late July. The company has provisionally set the cost of this at between Bt700 million and Bt1 billion, which will be book-ed as a third-quarter expense. 

Most of this cost is for compensa-tion that has already been paid to affected parties. This amount does not include expenses related to restoration of the damage, which is expected to take one year to complete. 

 

Rayong leak costly

PTTGC has paid compensation of Bt400 million to Bt500 million to about 5,000 affected businesses and fishermen out of 16,000 requests for assistance and compensation after the Rayong leak. Bowon said the process was slow because the company had to verify the information to see if the applicants for assistance had really been affected by the oil spill.

The third incident occurred in August when lightning struck the waste heat recovery unit of PTT’s Gas Separation Plant Unit 5, which supplied PTTGC’s I4-2 olefin plant (production capacity of 450,000 tonnes per year). This caused the shutdown of GSP Unit 5.

This has cost PTTGC Bt400 million a month. Lately the plant resumed 50-per-cent operation, but the cost so far has totalled at least Bt800 million.

Despite these setbacks, however, Bowon noted that the company’s energy-saving measures had reduced its operating costs by 2 per cent, which would improve the bottom line.