Thai Oil’s Clean Fuel Project Remains on Track
Thai Oil Public Company Limited’s (TOP) Clean Fuel Project (CFP) is advancing steadily, with a clear path forward for its completion. The company, through its President of Financial Planning, Mrs. Tarika Devahastin, confirmed that they have taken decisive action by hiring new engineering, procurement, and construction management (EPCM) contractors to oversee the next critical phase of development. This strategic move, which began with the transfer of work from the original contractor in the second quarter, is a crucial step towards ensuring the project stays on its ambitious schedule. TOP plans to hire additional contractors from now until the fourth quarter of this year, aiming to accelerate construction and achieve significant progress in the coming months. If successful, this proactive approach may help the company fulfill its commitment to its shareholders, with a target of finishing the large-scale project by the third quarter of 2028. This methodical and disciplined approach to project management reflects TOP’s dedication to strengthening its long-term operational capabilities and maintaining its competitive edge in the market.
Navigating Global Headwinds and Oil Market Dynamics
The company’s performance in the second half of the year is subject to various global economic factors that require careful monitoring and attention. These external pressures include ongoing geopolitical tensions, such as US tariffs on specific exports and the impact of US sanctions on Russia, which can disrupt global trade flows and influence commodity prices. Furthermore, the rising levels of global oil inventory present a complex supply and demand dynamic that the company must navigate. In addition to these factors, the increased oil output from both OPEC+ and non-OPEC+ members is a key consideration. OPEC+ has been pushing its production since April, with speculation that the increase will reach 2.2 million barrels per day, surpassing the group’s original plan and adding significant supply to the market. While non-OPEC+ producers, primarily the US, have also seen a rise in output, a potential slowdown in the second half of the year could create a mixed and challenging environment for oil prices and refining margins globally.
A Mixed Outlook for Refinery and Aromatics Margins
Thai Oil’s outlook for its refinery and aromatics businesses in the second half of 2025 is a mix of challenges and opportunities. The company speculates that the gross refinery margin (GRM) will see a slight decrease compared to the second quarter, primarily due to the arrival of new supply that is putting significant pressure on the gasoline market. This is compounded by high inventory levels, which further squeeze profitability. However, there is a positive forecast for the jet fuel business, which is likely to recover, providing some counterbalance. Despite the overall GRM pressures, the company is optimistic that the average GRM in the second half of the year will still surpass the average of $4.3 a barrel seen in the first half, a forecast driven by the planned closure of some refineries. Meanwhile, the aromatic business is expected to show improvement, with an anticipated increase in demand driven by the approaching new year festival, which raises the need for cloth and downstream products. Nonetheless, this segment still faces pressure from the continuous increase in new supply, making market dynamics highly competitive.
