30 November 2017, News wires – Thailand’s largest refiner Thai Oil PCL will stop producing fuel oil from 2022 once it completes a $4-billion upgrade that will boost output of clean fuels, officials said.
The project is part of a growing trend among global refiners to produce more high-quality oil products instead of the heavy polluting fuel oil. Shippers, the biggest user of fuel oil, will likely drop it after 2020 to meet requirements set by the International Maritime Organization.
The upgrade will bring Thai Oil’s capacity closer to Royal Dutch Shell’s 500,000-bpd Bukom complex in Singapore, the oil major’s biggest wholly-owned plant, while sharpening the Thai refiner’s competitive edge as brand-new complexes come online in Malaysia and Vietnam, analysts said.
“Competition in the cleaner, low-sulphur fuel space is set to balloon over the coming years, not least due to competition from established refiners in the region as well as completion of upgrades at many of China’s state-owned facilities,” said Peter Lee, oil and gas analyst at BMI Research.
Thai Oil plans to increase its refining capacity by 45 percent to 400,000 barrels per day in the next five years to turn “fuel oil into more valuable low-sulphur products that will help meet growing demand in the region”, its investors relations officials said in an e-mail.
The upgrade is also “designed to increase the refiner’s flexibility to process a wider array of heavier, less expensive crudes”, they said.
Thai Oil plans to install a new crude distillation unit (CDU) with capacity of 200,000-220,000 bpd, the officials said, and will scrap two existing units with combined capacity of 100,000 bpd.
Of the refinery’s proposed 400,000-bpd fuel output, 70-75 percent will be diesel and jet fuel, up from 56 percent currently, while gasoline and naphtha production will remain at 20-25 percent, they said.
Thai Oil has started a year-long bidding process for engineering, procurement and construction contractors and expects to make a final investment decision by the third quarter of 2018, officials said. Construction will take four years, they said.
Fellow refiner Bangchak Petroleum PCL also plans to debottleneck its refinery by 2020 so that it can run at 130,000-bpd, up 20,000 bpd from current levels, and increase its output of light and middle distillates. The company declined to disclose the project’s cost.
Both refiners will have to target the export market as “the Thai refining sector remains saturated while the pace of domestic consumption is set to be moderate at best,” BMI’s Lee said.
- Reuters
