1q/2009 analyst meetinganalyst meeting may may 2020, ,...

11Q/Q/20092009 Analyst MeetingAnalyst Meeting11Q/Q/2009 2009 Analyst MeetingAnalyst MeetingMay May 2020, , 20092009

PTT AuditoriumPTT Auditorium

DisclaimerDisclaimer

This presentation has be prepared by PTT Aromatics and Refining Public Company Limited (the “Company”)

and the information contained in this presentation is intended solely for your personal reference only. In

addition, such information contains projections and forward-looking statements that reflect our current

views with respect to future events and financial performance Furthermore it contains information whichviews with respect to future events and financial performance. Furthermore, it contains information which

are base on the Company’s data collections and analysis with third parties references. These views are based

on assumptions subject to various risks and uncertainties.

No assurance is given that future events will occur, that projections will be achieved, or that our assumptions

are corrects. The Company proscribes the redistribution, duplicate, and/or either disclosure of this

presentation in whole or in part without the written permission of the Company and the Company accepts no

liability whatsoever for the actions of third parties in this respect The Company does not undertake to reviseliability whatsoever for the actions of third parties in this respect. The Company does not undertake to revise

forward-looking statements to reflect future events or circumstances.

2

1Q/09 Operation and Financial Result

3

PTTAR’s OperationPTTAR’s Operation

Total Intake Early-Jan.09, Startup

A ti C l II (AR3)

251221

Aromatics Complex II (AR3)

which increased condensate

intakeKBD140

KBD

KBDintake.

Mid-Mar.09, Startup

Upgrading Complex Phase IUpgrading Complex Phase I

(CRS), which increased Jet

and Diesel productionCrude Intake (KBD) 150 105 146

Condensate Intake (KBD) 55 25 92

and Diesel production

Lower BTX utilization rate

from compressor failure at

CDU Utilization Rate 105% 73% 103%

BTX Utilization Rate 93% 48% 71%

from compressor failure at

AR2 leading to lower intake

4

Oil and Products Price MovementOil and Products Price Movement$/BBL 1Q/08 4Q/08 E d 08 1Q/09$/BBL 1Q/08 4Q/08 End.08 1Q/09

Diesel 114 70 54 53Jet Oil 114 75 54 55Gasoline 105 56 39 55Dubai 91 53 39 44

1Q/2009

Crude price re-stabilized in 1stQ from

better OPEC compliance and releasingDubai 91 53 39 44Fuel Oil 75 45 32 40

better OPEC compliance and releasing

of global stimulus plans

Globally high diesel stock due to the

economic slowdown continues to

pressure middle distillate crack.

Gasoline crack rebounded due to Gasoline crack rebounded due to

tightening supply in the US from lower

gasoline yield and some refineries

shutdown in the Asian region

Stronger fuel oil demand in the middle

east for power generations forced theeast for power generations forced the

crack to strengthen. The new

upgrading capacities has also taken

5

away the supply.

Feed and Aromatics Price MovementFeed and Aromatics Price Movement$/Ton 1Q/08 4Q/08 End.08 1Q/09

Paraxylene 1,123 673 719 727Benzene 1,042 436 307 383Naphtha 875 373 298 410

1Q/2009

PX demand significantly improved

Condensate 809 422 290 397 from China’s economic stimulus

package and restocking of PX

f d h i lfrom downstream petrochemical

Recover of BZ spread since mid

March due to demand resumedMarch due to demand resumed

mainly from SM producer (OR% of

SM increase from 70.1% in 1Q09

to 92.0% in 2Q09)

PX and BZ prices considerably

increased since mid-March from

tight supply following low

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operation rate during low margin

period

GRM

Diesel and Jet crack spread hedging contributed Mkt GRM

Stock Gain/(Loss) Net of LCM

GRM

Unit : $/BBL

p g g

gain amounting to 2,416 MB (4.67 $/BBL)


7 7810.04

Hedging Gain/(Loss)

With crude inventory as of 31 Dec.08 of being

marked down to 43.97US$/BBL and crude price

7.78(33.80)

for 1Q/09 average 47.79US$/BBL, a stock gain

amounting to 581 MB or 1.13* US$/BBL was (39 18)

registered in 1Q/09

(*Different between market 47.79US$/BBL and cost

(39.18)

( Different between market 47.79US$/BBL and cost

46.67US$/BBL)1Q/08 4Q/08 1Q/09

7

Aromatics P2F

PX spread increased from tight supply and

P2F

Mkt P2F


Unit: $/BBL

high demand mainly from China

With feedstock inventory as of 31 Dec.08 of

Hedging Gain/(Loss)

(18.55)


y

being marked down to 46.07US$/BBL

where as price of the feed stock of 1Q/09

18.43

(0 03)

1.46

where as price of the feed stock of 1Q/09

average 48.32US$/BBL, a stock gain of 845 0.27

(0.21)

2.60

(1.17)

0.03

(0.09)

(0.03)

MB or 2.60* US$/BBL was registered in

1Q/09(28.59)

(0.09)

(*Different between market 48.32US$/BBL and cost

45.72US$/BBL)(8.39)

8

1Q/08 4Q/08 1Q/09

GIMGIM

Unit : $/BBLMkt GIM


Hedging Gain/(Loss)

Hedging gain amounted to 2,425 MB or

5.53 (30.57)7.09

g g /( )

3.02US$/BBL which is derived from:

Crack spread hedging settlement = 852MB

3.45

(3.65)

2.29

2.55 1.78

( )

(0.47)

5.593.02

3Q and 4Q Crack spread hedging unwinding

= 1,573MB(3.65)( )

Initially, we’ve hedged 22% of our total

hedgeable products in 09

(32.51)

hedgeable products in 09.

Half of the portion has settled in 1Q

1Q/08 4Q/08 1Q/09 and the other half is still to be settled

in the remaining quarters.

9

Cash Cost, EBITDA and Net IncomeCash Cost

OPEXUnit : $/BBLFinancing Cost

OPEX reduce from no maintenance during the

period

1.72

4.58

2.27

Financing Cost increased mainly from higher

loan outstanding of 39,594 MB

Interest increased due to interest expense

1.05

p

from loan financing of AR3 ~195 MB

(Effective Interest Rate 1Q/09 3.76%)1Q/08 4Q/08 1Q/09

3.53

1.39 1.38

0.33 0.89

EBITDA*Unit : M.THB

Net IncomeUnit : M.THB

Q/ Q/ Q/

1,488 1,7422,742 4,754

(10,679)(15,269)

101Q/08 4Q/08 1Q/09

* Included LCM

1Q/08 4Q/08 1Q/09

Financial PositionBalance Sheet

148 203

Unit : M.THB Current Asset increased ~10,937 MB

due to higher sale from AR2 and AR3148,203137,540

Current LiabilitiesCurrent

A t

due to higher sale from AR2 and AR3

Equity increase 1,743 MB from 1Q/09

Net Profit

Long Term

Other Liabilities

Financial Ratio

Assets

OtherAssets

Net Profit

Long Term Loan

Fixed Assets

Financial Ratio

1Q/09 1Q/08Gross Profit Margin 3.10% 2.60%Net Profit Margin 4.10% 2.10%

Equities

Net Profit Margin 4.10% 2.10%

31 Mar.09 31 Dec.08Current Ratio ≥ 1 1.09 1.05Non Current Liability

31 31 Dec. Dec. 0808 31 31 Mar. Mar. 0909

to Equity ≤ 2 1.05 1.08

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15,000 MB. Bond Issue

Term, Term,

Before RefinanceBefore Refinance After RefinanceAfter Refinance Term Loans Repayment Schedule

50%

Revolving,

71%

Revolving,28%

WC, 22%

Revolving,19%

WC 10%WC, 10%

Current Ratio ≥ 1 1.09 1.42

Non CL/Equity ≤ 2 1.05 1.30Non CL/Equity ≤ 2 1.05 1.30

Fix/Float 25/75 46/54 Loan Profile as of 30 April.09

Credit Line 3,006 US$ MM

Outstanding 2 320 US$ MMPTTAR’s Rating

FX: 35.46 Baht/US$

Outstanding 2,320 US$ MM

Available* 686 US$ MM

PTTAR s Rating

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RatingBaa2

RatingBBB

RatingA-

(Expected Effective Interest Rate after Refinance 4.37%)

Capex during 2009 – 2013Unit MUSD

Synergy related projects will be gradually completed in 2009 and will

pay back within 2-3 years

Suspended Reformate splitter and Sulfolane project of 120 M. US$ due

to weak BZ demand and economics crisis

13

PTTAR new Business Profile

14

Expansion Projects CompletedExpansion Projects Completed1. Aromatics Complex II (AR3)

Commercial Completion run since January 09

Intake Condensate 65 KBD

Nameplate Production PX 655 KTA

BZ 355 KTA

Investment 937 Million USD, Fully-Paid

2. Condensate Residue Splitter and Kero Merox Complex (Upgrading Phase I)

Commercial Completion since March 09

Feedstock Condensate Residue from AR2 and AR3and AR3

Nameplate Production Diesel ~33 KBD

(350 ppm sulfer)

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Jet ~19 KBD

Investment 175 Million USD, Fully-Paid

OperationOperation of the fully integrated plantsof the fully integrated plants Discontinued Alliance Operation of the refinery with SPRC since January

30, 2009. Still on negotiation for the stream exchange between PTTAR and SPRC

– HVGO from SPRC and Hydrowax from PTTAR exchange Jointly owned Assets

– SPM and Piping system for refined products supplies with Thapplinep g y p pp pp Jointly operate

– LPG Jetty and Sulfur Palletizer

AR1, AR2 and AR3 are physically connected by pipeline and operated under single production mode

Gl b l LP f ll d l b PTTAR d SGS d b i Global LP was successfully develop by PTTAR and SGS and being effectively used for integrated production planning

Enhance cooperation with IRPC to share synergy benefits Enhance cooperation with IRPC to share synergy benefits Co-Load of crude to safe freight cost ~2 MM$/Yr (1-2 cargo per quarter, saving by

0.3$/bbl) Swap PTTAR’s Light Naphtha vs. IRPC’s Heavy Naphtha to achieve increased yield for

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Swap PTTAR s Light Naphtha vs. IRPC s Heavy Naphtha to achieve increased yield for both side ~5MM$/Yr

Jointly review other potential for intermediate stream exchange including BZ derivative

Progress of Synergy ProjectsProfit Enhancement Projects Completion Benefit

(M$/Yr)

MRU MRU Chemical injection and mercury removal facilities to enable AR1 to process

high mercury crude approximately 500,000 barrel/month which prices are

approximately 3 $/bbl lower than typical crude

July 09 18

pp y $/ yp

High TAN Crude crude Chemical injection to enable AR1 to process high acid crude approximately

0 - 500 000 barrel/month which prices are approximately 3 $/bbl lower

July 09 0-18

0 - 500,000 barrel/month which prices are approximately 3 $/bbl lower

than typical crude

Transfer purified H2 of AR3 to be feed stock of HCU at AR1 which instead H2 from HMU (PSA) and / or being feed stock of AR2

1Q / 2010 18-53

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Integrated ProcessIntegrated Process

CDU REF3Crude

145 KBDReformate

Jet/ KeroMEROX

1

HVU HCU CRS HDS DHDS Diesel 50 ppm

Jet/ KeroMEROX

2

Condensate Residue

Reformate

CS1 REF1Condensate

70 KBDARO1

CHXPSA1

PX

H2

Py Gas OX

BZ

CHXPSA1

H

CHX

H2

3

MXTO

Condensate Residue

CS2 REF2 ARO2

PSA2H2 H2 rich gas 3

Condensate

65 KBDPX

Py Gas

Reformate

18Total 280 KBD

65 KBDCondensate Residue

BZ

Nameplate Production Yield

Double PX and BZ capacity from AR3.

280 KBDOther Feed,

2,259 KTA

Completion of commercial run since

Jan 09LPG 9%

Paraxylene1,195 KTA

228 KBDCondensate

48%

Upgrading Unit (CRS) will increase Jet

and Diesel nameplate capacity from

Reformate, 5%

Light Naphtha,

LPG, 9%

Cyclohexane

Benzene662 KTA

135 KBD

86 KBD to 138 KBD since March 09

Reformate from the refinery will be Jet and Diesel

23%

Other 202 KTA

200 KTA

mainly used as feedstock for

aromatics production or alternatively

Diesel 43%

Jet and Diesel, 53%

Crude

52%

sold as gasoline componentFuel Oil, 10%145 KBD

19

Fuel Oil, 10%

Feedstock Petroleum Product Aromatics Product

PTTAR’s Solid Commercial ArrangementFeedstock SuppliesFeedstock Supplies

CrudeCrude100%

Products OfftakeProducts Offtake

Refined Refined ProductsProducts Min 70% of existing capacityProductsProducts Min 70% of existing capacity

100% of expansion capacity

Product Offtake Agreement – Refinery

18 years from Feb-2006PTTPTT

PTTPTT

CondensateCondensate 100%

PTT to minimum offtake 70% of PTTAR’s existing 145 KBD capacity at domestic price with right to offtake remaining 30% products

PTT to offtake 100% of PTTAR’s 55 KBD expansion

PTTPTT

Feedstock Supply Agreement – Refinery

18 years from 2006-2024

PTT to offtake 100% of PTTARs 55 KBD expansion capacity with minimum of 50% at domestic price

PPCL

End Users

PTT supplies 100% of crude and feedstock at market price

Feedstock Supply Agreement – AromaticsAromatics Aromatics ProductsProducts ~ 80% of total

products

TPT

Siam Mitsui PTTPTT

20 years from 1997-2016

PTT supplies 4.8 – 6.1 Million ton/year of condensate requirements

productsPTA

SSMC

I d

Sales and Purchase Agreements – Aromatics PTT to purchase 80% of total production Aromatics products are sold through PTT

20

Indorama Petro

chemical

(enhance trade receivable quality) PTT supplied the feedstocks at arm-length basis

Oil & Petrochemical Outlook

21

Consensus on GDP recovery by 2H09IMF views Global GDP Growth (April 09)

Some Economics data shows bottom out of recession in 2009. Most economists expected a gradual recovery in 2H 2009.

China and India GDP growth forecast for 2009 are 8% and 5 1% respectively

CMAI expects World GDP 2007 – 2011 Trillion Constant U.S. Dollars

are 8% and 5.1% respectively

China’s headline credit growth was at 29.7% YoY while car sales increased by 37% YoY in April.

US job losses, in April were significantly less th t ti hil fidthan expectation while consumer confidence index rose from 55 at the end of 2008 to 67.9 in May 09.

B k f A i & ML US banks after the stress test require less

capital than initially expected. Country GDP growth,%2007 2008 2009F 2010F

Gl b l 4 9 3 1 0 7 3 3

Bank of America & ML expect GDP 2009 – 2010

22

Global 4.9 3.1 -0.7 3.3US 2.2 1.1 -3.1 1.9China 11.9 9.0 8.0 8.3India 8.9 7.5 5.1 7.0

The investors confidence in global economy has begun to return

Dow Jones vs. Oil

Dow Jones Dow Jones Industrial average has

b d d f iDow Jones

rebounded from 6,500 points to 8,500 points after G20 Meeting gave the new hope to the global economy

WTIeconomy.

Oil index investment has also Oil index investment has also begun to rise. Investors begin to retrieve their money from the “safe heaven” and invest in equities andheaven and invest in equities and commodities.

The USD/EUR has weakened from 1.25 to 1.35 range as investors trimmed demand for the

23

greenback.

Global Oil Demand to rebound in the 2nd half of the year

24

Global Oil Demand Growth in 2008 - 2010

Global Demand Growth

Many analysts have a different view on demand shortfall in 2009 but most of the analysts have a consensus viewof the analysts have a consensus view that global oil demand growth will rebound by at least 1 million barrel

Global Demand Growth Forecast (mbd) per day next year.

This is in line with the current This is in line with the current scenario where demand starts to pick up in 2Q09

25Source : PTT OIM, JBC

Future Refining Capacities could be delayed

The current economic crisis has caused some refinery projects to be delayed between 2010 –refinery projects to be delayed between 2010 –2017.

About 2 9 million barrels per day of the new About 2.9 million barrels per day of the new refining capacities initially planned to start up during 2010-2014 will be postponed or canceledcanceled.

Most of the delays will come from the Asia pacific and Middle East regionpacific and Middle East region.

The negative scenario assumes the extreme case that all projects that have not reached a certain stage will be delayed

to after 2013, or , to a lesser extent, scrapped altogether, , , pp g


Global Refining Utilization Rate

The current lower global refinery tili ti t h ld h l li thutilization rate should help relieve the

high product inventories level in the near future.

With the expected economic recovery, the refinery utilization rate in Asia shouldrefinery utilization rate in Asia should rebound to 90% level next year while the rate in the US and Europe should decline further to 80%further to 80%.

In the long term, utilization rate in Asia is expected to be healthily supported by the regional demand growth while some US and Europe refiners will face potential

27

p pshutdowns

Source : PTT OIM, JBC

OPEC Supply

OPEC continuously cut production to support pricessupport prices.

The OPEC compliance rate which continued to increase throughout the 1Q/09 helped stabilize the oil price.

Cooperation by Russia on production cut is expected by OPEC to help improve oil marketmarket.

OPEC will meet again on 28th May 2009 to decide whether or not they should further reduce the output quota.


Non – OPEC Supply

Crude production in non OPEC will decline Crude production in non-OPEC will decline further until 2015. Supply growth will only come from the liquids (Condensate, NGL).

The lower oil price has given less incentive to invest in the upstream production, especially in the non-OPEC region where the marginal cost is higher.

Russia production is expected to decline further from 9.5 mbpd this year to 8.6 mbpd in 2030 due to the taxing system.due to the taxing system.


Global Supply Outlook

Expected decline in global long term oil supplyExpected decline in global long term oil supply will give the oil price a very bullish outlook.

Current crude oil production will be depleting at a high rate in the future. It would take about 49 mbpd of new crude oil production capacity in 2030 to maintain the current crude output level.

The marginal cost of oil price is currently atThe marginal cost of oil price is currently at 70$/bbl.

Raising of oil price should further enhance the refining margins as it has been seen in the past.


More impress PX situation

Incremental Demand & Supply of world PXMany major projects delay

KTA %OR

Country Producers Capacity (KTA)

Delay in 2009

China

CNOOC 840 Q1 --> Q2

Fujia Dahua 700 Q1 --> Q2

Shanghai NO 2 600 Q1 > Q2Shanghai NO.2 600 Q1 --> Q2

Exxon Fujian 700 Q1 --> Q3

Kuwait KARO 820 Q2 --> Q3

Oman Oman Oil 820 Q2 --> Q4

Country Producers Capacity (KTA)

Status

Source : PCI , PTTAR update as of May 12-09

(KTA)

China Dragon Aromatics 800 2011 Q2/2012

Korea S-Oil 900 2011 Q2/2012

31

, p y

S’pore Jurong Aro. 800 2011 2013

China Will be the Major PX Consumer

China PX Pull ThroughImp.Imp.PTAPTA

Global PXConsumption

Global PX

China compare to rest of the world (RoW)

Imp.Imp.PXPX

PTAPTA

RoW

Consumption Production

Dom.Dom.PXPX

China

Source : CMAI’s 2009 world petrochemical conference, 25 – 26 March 2009

(Right Axis)

Despite lot of new PX built up in China, China still need to import PX about 2 – 4 million ton per year for the next 5 years

For year 2013, China will be the bigest player in PX market representing 46% of global PX trade

When all PX derivatives are considered, China will consume roughly 55% of all PX produced globally.

32

Realize more supply BZ from many sourcesKTA %OR BZ demand is expected to improve

along with global economics recovery.

BZ capacity addition is associated with PX and Ethylene projects.

PTT Phenol started up early of March 09 and use 176 Kton per BZ pfrom PTTAR (27% of PTTAR BZ production) as feed stock.

Source : CMAI , PTTAR update May 12-09

PTTAR reduced BZ yield ~5% by adjusting conversion ratio and operating temperature.

Under studying to develop BZ downstream derivative

i i hi

33

cooperation within PTT group

Conclusion for PTTARConclusion for PTTAR1. Financial result for 1Q/09 was supported by hedging activities and improvement of

Aromatics margin in March 2009

2 E i bilit ill i d d ti it f b th A ti d P t l2. Earning capability will improved as production capacity for both Aromatics and Petroleum products increased substantially starting in March 09.

3 Continue to concentrate on Risk Management3. Continue to concentrate on Risk Management

- Oil crack spread including LPG - Aromatics spread

- Energy cost - Foreign currency and interest rateEnergy cost Foreign currency and interest rate

4. MRU and High Tan crude projects will commence in early of 3Q/09, PSA will commence in 1Q/10

5. Aromatics market is expected to received continue support from economics recovery in China and the country stimulus package directed toward textile and polyester market.

6. Diesel and Gasoline market will be supported by seasonal demand and economic recovery

7. Crude oil price is forecast ~ 50$-60$ / bbl for the remaining of 2009 (no stock loss)

34

8. Enhance cooperation with PTT group to achieve more synergy benefits

Thank YouThank You

Investor RelationsEmail : [email protected]

Tel : 662-937-1099, Fax : 662-937-1089

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1q/2009 analyst meetinganalyst meeting may may 2020, ,...

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