Diesel Record High Of Bt26.29

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FUEL SHORTAGE

Oil firms to import huge lots of diesel

Wed, April 12, 2006

Domestic supplies close to crisis point

PTT Plc, Shell Co of Thailand and Esso (Thailand) will import 120 million litres of diesel this month to relieve current shortages, which is expected to spark a spike in retail prices despite government attempts to keep them under control, says a source in the energy sector.

"Domestic supplies are not sufficient to meet rising demand this month. Diesel must be imported, even though the imports carry a high price," the source said.

It was reported from Sakon Nakhon that some stations in that province were forced to shut down, because oil wholesalers limited supplies to each station to 16,000 litres a day, while demand was 35,000 litres.

Due to tight supplies that have already raised the retail diesel price to a record high of Bt26.29 per litre, the Northeastern Truck Operators' Association announced yesterday that after Songkran, they would raise their transport charges 40-50 satang per kilometre.

Association president Pramote Kongthong said high oil prices had caused more than 20 of its 392 members who owned more than 7,000 six- and eighteen-wheeled trucks have shut down operations.

"They will suffer more. Aside from the high prices, some stations refuse to sell fuel. So we have to raise transport charges," he said.

The new charge for transportation services for less than 200 kilometres will be Bt1.60/km, up from Bt1.20. Outside the 200km radius will cost Bt1.70/km, up from Bt1.40.

Caretaker Deputy Prime Minister Chidchai Vanasatidya, as acting prime minister, said after a Cabinet meeting yesterday that PTT Plc should keep its prices as low as possible in this situation.

"We will try to keep the supply sufficient," he told reporters. "Although there will be no extra measures, we will exercise existing ones like the energy conservation campaign and alternative fuel sourcing. Meanwhile, the Commerce Ministry will have to minimise the impact on prices of consumer products."

PTT president Prasert Bunsumpun said PTT would import diesel if that were necessary to alleviate the situation, even though refined diesel oil is now priced as high as US$80 (Bt3,000) per barrel.

"Due to the high world price, domestic prices rise much more slowly. That might explain why some oil companies do not want to sell diesel," he said yesterday on the sidelines of a PTT shareholders' meeting.

Prasert told shareholders that thanks to the high oil prices, total revenues for PTT were expected to reach at least Bt1 trillion this year, up from last year's Bt900 billion. Also last year, its net profit was reported to be Bt85.5 billion.

Chaiwat Choorit, senior executive vice president for PTT's oil operations, said some Caltex and Jet stations had stopped selling diesel, due to the negative marketing fee. Clients have flocked to other stations: PTT, Esso and Shell.

He said that at PTT stations, diesel sales volume had increased from 15 million litres a day last month to 18 million litres now.

"The supply is extremely tight," he said.

It was reported that the diesel marketing fee is in the negative area, at minus 20 satang per litre.

Energy Policy and Planning Office (Eppo) director-general Metta Banterngsook explained that the situation would be tight this month, with Thais taking trips during the Songkran holiday and high demand for diesel to transport agricultural goods. Some local refineries have closed operations, while some in Singapore have switched to producing more jet fuel.

"Some oil companies have tried not to import the fuel, due to the low retail prices. Meanwhile, to import diesel from Singapore, they are also subject to a high price. Aside from the $80-per-barrel price, they have to add $6 or $7 more, so as to reduce the sulphur level to meet Thai standards," said Metta.

Eppo is now closely monitoring the situation by requiring all companies to submit their import plans, so as to keep imports at an appropriate level.

Earlier this year, the government tried to place controls on fuel imports, out of fear that high global prices would increase the national trade and current-account deficits.

Energy reporters

The Nation