Thailand's PTT in talks with Gokongwei Group on petrochemical project

BANGKOK, Thailand – PTT Public Co. Ltd. (PTTPC) is pushing through with its negotiations with Gokongwei-owned JG Summit Holdings Inc. for a possible joint venture in the petrochemical business.

Artasith Pothiapinyanvisuth, PTTPC executive vice president for commercial and international marketing for oil business group, said talks are ongoing with JG Summit on the joint venture.

“We still consider to invest in the petrochem business. We are discussing it with JG Summit,” he said.

But the PTTPC official said he could not divulge the details of the ongoing talks as they have yet to firm up the potential deal with the Gokongwei-owned firm.

According to the official, plans to expand its business in the Philippines are still being considered despite the global financial crisis, although he pointed out they would treat all business opportunities with utmost “caution”.

“We plan to expand in the Philippines but we will proceed cautiously,” the official added.

In 2007, sales from petrochemical subsidiaries and joint ventures of the group stood at 70.749 billion bahts.

PTTPC made investments in petrochemical and refining businesses through its subsidiaries.

Rayong Refinery Plc. and Aromatics (Thailand) Plc. combined to form in PTT Aromatics and Refining Plc. (PTTAR) which debuted on the stock exchange of Thailand in early 2008.

PTT Chemical Plc. also invested some 600 million bahts to increase its capacity from 250,000 to 300,000 tons per year. The new capacity is expected to come on stream in the first quarter of 2009.

The company also spent some 250 million baths for the improvement of its naphtha storage tank.

The group earlier signified interest to pour in as much as $400 million into the Philippines’ petrochemical industry. This investment would be part of the short to medium-term expansion plan of the Thai energy giant in the country.

The PTTPC official added they are also eyeing to invest up to $700 million for several natural gas projects.

PTT is one of the major sources of petrochemical feedstock. In addition, the Philippines is one of the top five countries for PTT’s export of plastic products.

The Philippines is also one of the biggest clients of the PTT Group in terms of petrochemical.

JG Summit Holdings owns JG Summit Petrochemical Corp. which went into commercial operations in mid-1998 as the sole producer of PE (polyethylene) in the country.

In its first year of operations, it produced 51,761 metric tons of PE valued at P1.3 billion and sold most of it in the domestic market.

In the polypropylene market, JG Summit Petrochem and another Filipino firm, Petrocorp., are the sole makers which have competed with foreign suppliers for the past couple of years.

PTT has so far been active in the downstream oil sector, being the owner of the biggest handling facility in Subic Bay which is under a long-term lease agreement with Philippine Coastal Storage and Pipeline Corp. (PSCPC) and can store up to 2.4 million barrels of finished petroleum products.