Thai Oil Public Company Limited (Thaioil) has revealed its 2025 business strategy, focusing on sustainable growth despite anticipated challenges in both domestic and international energy and petrochemical markets. Thaioil remains confident in its long-term growth potential and opportunities, particularly through the expedited management of the Clean Fuel Project (CFP), which will serve as a crucial foundation for strengthening the company and ensuring national energy security.
Mr Bandhit Thamprajamchit, Chief Executive Officer and President of Thai Oil Public Company Limited, stated: “Despite ongoing volatility in the global and Thai economies, there are positive factors that will benefit the energy and refinery industries in 2025. Jet fuel demand is expected to increase due to growth in commercial flights, especially in Asia, where tourism continues to rise in the wake of the COVID-19 pandemic. Thaioil holds the highest market share in this segment, approximately 50%. Diesel demand is also projected to increase due to economic growth in Asia. While gasoline demand continues to grow, it may face pressure from the supply of new refineries set to begin operations next year, potentially leading to some recovery in refining margins in 2025. Overall, this is expected to be a positive factor for the refinery business in the long term.”
To address challenges and seize growth opportunities, Thaioil has defined four key strategies for 2025:
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Strengthen Refinery Business and Expedite the Clean Fuel Project (CFP): Thaioil prioritises the CFP as the key to its long-term strength. The company is also implementing new technologies to improve productivity, enhance competitiveness, and control costs.
The CFP has achieved its first success with the trial run of the Diesel Hydrodesulfurisation Unit (HDS-4) in order to enhance flexibility of Euro 5 diesel production February 2024. This supports the government’s policy of promoting more environmentally friendly fuels. The CFP is currently under construction, with major equipment delivered to the site since late 2023. The fourth Crude Distillation Unit (CDU-4) is progressing faster than other parts. Meanwhile, the Residue Hydrocracking Unit (RHCU), which upgrades fuel oil and asphalt into jet fuel and diesel, is undergoing equipment installation and piping connection. Due to its complexity and limited space, progress on this unit is slower than on others.
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Value Chain Extension: Thaioil is focused on developing high-value products for various industrial applications to meet evolving market demands. This includes collaborating with domestic and international partners to expand distribution channels and penetrate high-potential markets such as Vietnam, Indonesia, and India. Of particular note is the expansion of the Disinfectant & Surfactants (D+S) chemicals business, which plays a significant role in the high-growth cleaning products and infection control market. Under the "TOP for The Great Future" initiative, Thaioil is also exploring new businesses with PTT Group and other partners, such as bio-surfactants, blue/green hydrogen, bio-jet fuel, and Carbon Capture, Utilisation, and Storage (CCUS).
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Financial Strength: Thaioil prioritises efficient cost and expense management, along with prudent commodity price and foreign exchange risk management. This approach aims to maintain financial liquidity and investment-grade credit ratings, building investor confidence.
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Drive for Sustainability: Thaioil is committed to sustainable business practices, considering Environmental, Social, and Governance (ESG) factors. The company is focused on improving energy efficiency to reduce greenhouse gas emissions and creating value for society and communities through various projects, such as promoting education, job creation, and access to healthcare in remote areas.
"We are confident that these four strategies will enable Thaioil to overcome challenges and achieve sustainable long-term growth, delivering appropriate returns to shareholders and ensuring Thailand’s energy security," added Mr Bandhit.
Nevertheless, Thaioil is concerned about the current situation involving subcontractors of the UJV – Samsung E&A (Thailand) Co., Ltd. (Samsung), Petrofac South East Asia Pte. Ltd. (Petrofac), and Saipem Singapore Pte. Ltd. (Saipem). These subcontractors have jointly resolved to halt construction of the CFP unless UJV – Samsung, Petrofac, and Saipem settle all overdue payments. Thaioil acknowledges the hardship faced by the unpaid subcontractors and has consistently sent letters urging UJV – Samsung, Petrofac, and Saipem, as well as their parent companies, to pay the overdue amounts as per the terms of the subcontracts.
Both Thaioil and the subcontractors are affected by the breach of contract by UJV – Samsung, Petrofac, and Saipem. Expediting CFP management remains a top priority for Thaioil. The company is closely monitoring the situation, assessing the impact on the project timeline, costs, and business ecosystem, and implementing measures to mitigate damages. Thaioil is also preparing appropriate actions to expedite the completion of the CFP, prioritising the best interests of the company and its shareholders.
Currently, clarity on this matter is expected in early 2025. While the subcontractors' claims for overdue payments from UJV – Samsung, Petrofac, and Saipem have delayed progress, the commencement of commercial operations for the CFP will not be indefinitely postponed.
Despite these obstacles, Thaioil remains committed to completing the CFP as quickly as possible to enhance competitiveness, create added value for the business, and strengthen Thailand's long-term energy security and economic development.