PTT to step in if Shell bails from Rayong

PTT top hats have admitted the Thai state-owned oil and gas firm will take over the Rayong Refinery Co if majority shareholder Royal Dutch/Shell bails out of the 150,000 barrels per day venture. The refinery is completing a debt restructuring.

In a statement PTT said, “Creditors of Rayong Refinery have agreed to give the company a 15% haircut on [its] US$1.34 billion debt. With the company’s cash-on-hand of US$250 million and a cash injection from PTT of US$250 million, Rayong Refinery’s net debt will fall to around US$650 million.”

“To be able to service the debt, Rayong Refinery needs to maintain a net profit of around 2 billion baht (US$48.2 million) for every six-month period, as it did in the first half, with a gross refinery margin of around US$3 a barrel,” it added.

The major creditor of Rayong Refinery is J.P. Morgan Chase & Co.

According to PTT Senior Executive Vice President Pichai Chunhavajira, “We expect to own a 100% stake in Rayong Refinery after its debt restructuring is completed. However, the move will depend on Shell’s decision regarding its ownership in Rayong Refinery.”

To this PTT President Prasert Bunsumpun added, “Rayong Refinery would be wholly-owned only temporarily, as PTT would like to assist the company in its debt restructuring. After the restructuring is completed, PTT [will] divest some of its holdings to interested investors.”

Currently, Royal Dutch/Shell owns 64% of the refinery with the balance being held by PTT. Shell did not release a comment.