Thai IRPC to shift absolute focus on petrochemical business

26-Aug-09

As the increasing popularity of alternative fuels has weakened projections of its refinery, Thailand’s IRPC Plc has decided to focus solely on the petrochemical business. The refinery performance has been waning on account of several factors including the recent demand deterioration due to the global economic slowdown, entry of larger players and increasing adoption of alternative fuels to replace conventional fuels, estimated to reach 20%. Crude prices at current levels will continue to suppress refining margins, as the petrochemical industry benefits from improving demand in China, a trend also likely to continue until year-end. IRPC's business strategy has been revamped as part of its plan to rehabilitate the company's performance, which has underperformed in recent years. IRPC is a petrochemical manufacturer and oil refiner affiliated with PTT Plc, and has decided to progress to achieve its goal of being a leader in integrated petrochemical business. Output from the refining unit that will be kept operational, will provide feedstock for it’s petrochemical units. IRPC's new business strategy aims to transform its operation into the top-quartile integrated petrochemical complex in Asia by 2014. The strategy involves improvement of production capacity, value addition, cost reduction, maximising asset value and investing in high-margin products. Augmented investments for the petrochemical unit to increase efficiency and expand the capacities of high-margin and high-growth businesses such as acrylonitrile-butadiene-styrene (ABS) and polypropylene. Plans are underway to commercialise its ports and tank facilities through possible joint-venture investments. The company’s 11,000 rai of unused land would be developed as industrial land serving local industries and some of the plots may also be sold. The company plans a US$1.2 bln investment outlay over the next five years for its business strategy. The amount is expected to be generated from the company’s cash flow, and loans if required.