Fitch said yesterday the ratings reflected the company's "competitive advantage as a fully integrated oil refining and petrochemicals producer".

In addition, IPRC has expertise and a long track record in downstream petrochemicals. It benefits from PTT as its largest stakeholder, the agency said in a statement.

The statement added that fully integrated petrochemical production provided cost competitiveness, a wide range and optimisation of product line, as well as a reduction of earnings volatility.

Fitch said the ratings were based on IPRC's financial position with substantially lower leverage due to recapitalisation and improving cash-flow generation. Fitch noted it was likely to weaken in the medium term due to new spending.

IPRC's financial position has improved significantly since 2004 owing to its debt restructuring and the recovery in the oil refining and petrochemicals businesses.

"Fitch also notes there may be some cost savings with the PTT group, mainly related to crude supply management and product off-take and swap. However, its operational overlap and integration to the PTT group is likely to remain limited, given IPRC's independent and fully integrated facilities," the statement said.

The ratings take into consideration IPRC's "high exposure to volatile gross refining margins" and petrochemicals prices. This will have a "substantial impact on its earnings and cash flow generating capability".

Fitch added that the ratings reflected a need for the company to improve its refinery complexity to meet more stringent standards and improve production. This will require further capital expenditure.

The stable outlook for the company reflects the agency's expectation IRPC will "maintain its competitive advantage and relatively strong market position supported by its fully integrated oil refining and petrochemicals capabilities".

Fitch said IRPC would keep leverage manageable during cyclical downturns and periods of higher spending.