Thai Oil to Stop Refinery Output for Two Weeks After Storage Tank Explodes
Bangkok, Dec. 3 (Bloomberg) -- Thai Oil Co., Thailand's
largest oil refiner, said it will stop production for at least
two weeks after an explosion and fire at crude oil storage tanks
at it's sole refinery cut off oil supply.
The explosion at Thai Oil's refinery in Chon Buri province
in the middle of the night killed two people and set on fire four
crude storage tanks and threatens five other tanks. The company
is still investigating the cause of the explosion.
The tanks are still on fire and losses so far are estimated
at 500 million baht ($12.8 million), with 30 million liters of
crude oil lost, INN news agency reported, quoting Chairman
Surakiart Sathirathai. The refinery is insured with Dhipaya
Insurance Pcl for up to $2.2 billion, said Surakiart.
``It will take at least two weeks to assess the damage
before we start refining again,' President Chulchit Boonyaketu
told ITV television network. ``Thai Oil may also needs some time
to find other source of crude oil supply.'
Petroleum Authority of Thailand, the state oil utility, will
ask local refiners, such as Star Petroleum Refining Co., Rayong
Refinery Co. and Bangchak Petroleum Pcl, to increase production
to offset the losses, said Chulchit.
``All domestic oil refiners will be asked to stop exporting
and increase their refining production to avoid short-term impact
on local gasoline prices and supply,' he said.
Refiners
The refinery, 50 kilometer east of Bangkok, has a capacity
of 220,000 barrels per day, or a fourth of the country's total
refining production.
Star Petroleum is majority owned by U.S.-based Caltex Corp.
-- a refining joint venture between Chevron Corp. and Texaco
Corp. -- while Rayong Refinery is majority owned by Royal
Dutch/Shell Group., the world's second-largest publicly traded
oil company.
Thailand has a total oil refining capacity of 800,000
barrels per day, but only 75 percent is being used after a
recession reduced domestic demand.
Last month, Thai Oil settled an agreement with its creditors
to restructure $2.25 billion of debt. The company stopped
servicing the debt last year after recession cut its revenue.
The fire at the refinery is not likely to change the debt
restructuring plan if the plant is insured up to $2.2 billion
against damages from fire as claimed by the company, analysts
said.
``If the PTT has indicated that Thai Oil is insured against
fire for $2.2 billion, that should be adequate' to cover any
damages from the accident, said Thomas C. Hilboldt, head of
regional energy and chemicals research at Salomon Smith Barney HK
Ltd. in Hong Kong.
The company would have needed fresh funds and required to
rework the debt restructuring plan if the damages weren't insured
against the fire, he said.
Few analysts track Thailand's biggest oil refiners because
none of the largest refiners in the country, except Bangchak
Petroleum Plc, are listed on stock exchanges.
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