SET-listed IRPC, a petrochemical arm of national oil and gas conglomerate PTT Group, expects the Russia-Ukraine conflict to drive up prices of naphtha, a feedstock for the petrochemical industry, following soaring global crude oil prices.
However, the rise in naphtha prices will last for only a short period, said Chawalit Tippawanich, president and chief executive of IRPC, who added that he believes the price increase mainly resulted from "panic" after the conflict escalated into a war.
The price of naphtha in the spot market increased after global oil prices soared beyond US$100 a barrel.
However, IRPC does not expect naphtha prices in the spot market to increase to very high levels, which would increase the prices of petrochemical products worldwide.
At this moment, Mr Chawalit said, the company does not clearly see a serious negative impact on the petrochemical industry.
"We expect the war will end soon and the global situation will be back on track," he said.
Though oil exports from Russia to Thailand are at a low level when compared with the amount coming from the Middle East, Thailand still bears an impact from the Russia-Ukraine tension as Russia is a major oil exporter, supplying 4 million barrels of oil a day, with around 2.8 million barrels being exported to European countries.
"If sanctions from the US and its allies on Russia cover oil trade, Opec [Organization of the Petroleum Exporting Countries] and Iran can export an additional 2-4 million barrels a day to replace the oil supply from Russia. This can help avoid the global panic," said Mr Chawalit.
Looking at the impact of the global oil price surge on its oil inventory, IRPC expects to have oil stock gains in the first quarter of this year because the current oil price is higher than that in last year's fourth quarter, which closed at $78.4 per barrel.
The firm earlier announced capital spending of 41.35 billion baht over the next five years for development projects. One is the Ultra Clean Fuel Project, which aims to produce more environmentally friendly diesel, including ultra-low sulphur diesel to help the government in its efforts to reduce PM2.5 ultra-fine dust.
