Thai Oil pursues low-cost acquisitions

Thai’s largest oil refiner Thai Oil P.L.C. has made looking for low-cost acquisitions refining and aromatics in Asia a priority. It is exploring opportunities to acquire cheap oil refineries and aromatics plants in Asia, which face high costs and low margins from low-grade petroleum products, in order to strengthen its asset expansion in the long term, Managing Director Viroj Mavichak said. Company shareholders had approved a plan for the company to issue up to US$500 million worth of bonds, some of which could be used for acquisitions should opportunities arise. Over the past few years, high oil prices had provided a high gross refinery margin (GRM) for the industry and had attracted a lot of investors. However, the plunge in oil prices by 70% from mid-2008 to the end of the year meant some investors were unable to start businesses and others were unable to revive existing operations. Viroj said the company also had a low cost of production, with high flexibility in production lines as well as a variety of products wider than rivals in the region. He said the new assets it would buy would have to provide at least a 15% investment return rate, adding that the cost of new investment stood at between US$16,000 and US$20,000 per barrel per day. (April 4, 2009)