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Thai refinery IRPC delays $1 B chemical project amid coronavirus outbreak

Thai oil refiner and petrochemical producer IRPC Pcl has delayed a 32.4 billion baht ($1 billion) petrochemical investment and cut run rates by 20% as demand for petroleum and petrochemical products falls amid the coronavirus outbreak, the company’s president said.

“We are delaying the paraxylene project for now because demand is slowing and it uses a lot of capital … it is good project, but should be delayed given the current situation,” IRPC President, Noppadol Pinsupa, told Reuters in an interview.

The project was slated to begin this year and add 1.3 million tonnes paraxylene, used to manufacture industrial chemicals that make plastic bottles and fabrics, and about 400,00 tonnes of benzene to IRPC’s capacity in 2024.

“We have to focus on liquidity and manage investments including holding off projects that are not immediately necessary or not suitable for the situation,” he said.

However, IRPC would press ahead with a 9 billion baht clean fuels project, he said, because it was a strategic investment and in step with government regulation to improve diesel quality, he added.

The company also slowed down crude oil refining after demand for petroleum products dropped.

“After the crisis started, we reduced crude runs by 20% on average and it will stay at this level in second quarter,” Noppadol said.

It had planned to refine 205,000 to 210,000 barrels of oil per day (bpd) this year, but has reduced that number to 180,000 bpd. IRPC is Thailand’s third largest refiner with a capacity of 215,000 bpd.

The coronavirus outbreak has dampened demand for its petroleum products such as jet fuel and gasoline, which account for 4% and 10% of production respectively, but the company has been able to rebalance some production to diesel and naphtha to produce petrochemicals used in packaging.

To fight the virus Thailand declared a state of emergency and curbs on movement between its provinces, as well as a nationwide night-time curfew, along with a ban on incoming international passenger flights.

IRPC, part of state-owned PTT Pcl, expects prices to bottom out by end of the second quarter and recover in the second half of the year, but run rates would were unlikely to return to previous targets.

Thailand has recorded a total of 2,938 cases and 54 fatalities from the new coronavirus, and on Tuesday was planning to lift some restrictions as the number of new cases slowed. ($1 = 32.4300 baht) (Reporting by Chayut Setboonsarng; Editing by Alex Richardson)

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