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Published on October 13, 2007

Rayong Refinery and Aromatics (Thailand) plan to spend US$365 million (Bt12.4 billion) on improving production efficiency and expanding capacity after their amalgamation is completed next year.

These synergy projects are scheduled to start next year and take three years to complete.

In the coming year, the businesses will use $142 million to increase feed flexibility and expand production capacity of condensate residue from 32,700 barrels per day to 55,000 barrels.

Rayong Refinery's ongoing projects are the expansion of its reforming and upgrading plants, in which it has invested $380 million and $180 million, respectively, said company president Chainoi Puankosoom. The expansion of the reforming plant will be completed in August and the upgrading plant in December next year, he said.

In 2009, $43 million will go towards revamping Aromatics II and creating hydrogen-transferring linkage.

The remaining $180 million will be spent on expanding total production capacity of deep hydro-desulfurisation from 25,000 barrels per day to 70,000 barrels and reformating splitter and sufolane in 2010.

Chainoi said all the synergy projects would generate benefits to the company of $169 million to $348 million per year, based on a refinery margin of $6.6 per barrel, with a benzene spread of $294 per metric tonne and paraxylene spread of $448 per metric tonne.

The new company resulting from the amalgamation of Aromatics (Thailand) and Rayong Refinery will be the country's largest integrated refiner in terms of production capacity. Refining capacity will be boosted to 280,000 barrels per day and aromatics production will surge to 2.2 million tonnes per year.

Chainoi said the amalgamation would reduce risks from the volatility of the petrochemical and refining business. The projects will also create more diversified incomes by linking refining to aromatics and other downstream products.

The new company's debt-to-equity ratio will stand at 0:31, he said.

"Owing to low debts, we will consider a new bond issue or financing for investing in our synergy projects after we complete the amalgamation," he added.

The amalgamation is expected to be completed by the end of this year and the new company's shares will trade on the Stock Exchange of Thailand at the beginning of next year, he said.

Meanwhile, the project to upgrade its refining plant to meet Euro IV standards will be postponed for one year because considerable demand in the global market has caused a shortage of contractors. It has to spend around $100 million on the upgrade, which is expected to be completed in 2011.

The company also plans a shutdown of its crude-oil distillation plant for 20 days for maintenance and tie-in in June next year, he said.

 Chalida Ekvitthayavechnukul

 The Nation