KCS TOP analysis Oil leak possible, negative outlook expected during the period It is estimated that every expense of 1 billion baht will affect profits in 2023-2024 by approximately 8-9%.
Krungsri Patanasin Securities (KCS) Analyzing the case of oil leak problems Thai Oil Public Company Limited (TOP) said that the company views the incident as having no significant impact on the operation of TOP’s refinery. And there is insurance to cover damage caused by property and business interruption. Insurance for the transportation of goods by sea and etc. Initially, the company estimated that the amount of oil spill would be approximately 50,000 – 100, 000 liters Most of the oil has been contained at the leak point. and only a small portion escaped from the quarantine point. The company will use chemical injections to sink the oil that escapes from the containment area into the sea for recovery. To prevent it from spreading into the shore/tourist areas, the company considers using Buoy No. 1 (SBM-1) with a capacity similar to SBM-2 instead during the period when SBM-2 still has to stop operating for inspection. (no time period has been specified) and there is a backup option in the event that the SBM-1 buoy cannot be used using CBM and through PTT’s port. The company has spare pipe parts for the SBM-2 that leaks (pipes on the surface of the water).
Thai Oil currently has crude oil stocks to support production for approximately 30 days. Executives think that during September ’20, refining will not be significantly affected.
The company has insurance to cover impacts on third parties with a limit of approximately 50 million baht (deductable 10,000 baht), protection against environmental impacts with a limit of 25 million baht (deductable 1 million baht), all risk protection for property damage of 255 million baht / oil loss. 761 million baht (deductable total 5 million baht) and business interruption 1,120 million baht (deductable 60 days)
KCS expects the market to be concerned about the impact in terms of: 1. Expenses and lawsuits (the SPM leak incident at the SPRC Refinery has recorded related expenses of approximately 1.7 billion baht, and there are still lawsuits of approximately 7.7 billion baht)
2. Increased costs from adjusting oil transportation by ship if SBM-2 cannot be returned to use. We estimate that every 1 month transportation costs will increase by approximately 300 million baht.
3. Additional expenses if you have to accept the burden of not being able to let ESSO use the buoy to deliver oil. Initially expected to be around 85-90 million baht./month.
It is expected that in the second half of 2022, TOP will still have an effect from the above crude oil spill issue. It is estimated that every expense of 1 billion baht will affect profits 66-67 approximately 8-9% .
Source: Thai News Agency