March 25, 2020 / 3:59 AM / 7 days ago

UPDATE 2-Thai oil refiners cut output as fuel demand falls - sources

(Adds comments from SPRC)

SINGAPORE/BANGKOK, March 25 (Reuters) - Oil refineries in Thailand are reducing their run rates by 10% to 20% after measures taken by the government to curb the spread of the coronavirus caused domestic fuel demand to fall sharply, two sources familiar with the matter said on Tuesday.

At least some of the refineries, including PTT Global Chemicals, IRPC PCL and Star Petroleum Refining Corp (SPRC), are already running at reduced rates since last month, said one of the sources and a third source from a Thai refinery.

Thailand, one of the biggest refining centres in Southeast Asia, can process 1.229 million barrels per day of crude and condensate, according to the Petroleum Institute of Thailand.

Other refiners in Thailand include Thai Oil PCL, Bangchak Corporation PCL and Esso Thailand.

“All the refineries need to cut (runs further) because we cannot sell any products at the moment,” the first source said.

“Bangchak cut, PTTGC, SPRC and IRPC have already cut and are thinking of cutting (run rates) a bit more. Thai Oil has already cut about 10%,” he said, adding that the cuts were between 10% and 20%.

The postponement of major events such as Songkran, also known as the water festival, meant that “peak demand for oil products in April is now gone,” said the Thai refinery source, prompting refiners to cut fuel output.

The sources declined to be named due to the sensitivity of the matter. PTT, PTTGC, Thai Oil, IRPC and Bangchak did not respond to requests for comment.

“All refiners will ... look at demand and optimize production,” a SPRC investor relations officer told Reuters, but declined to say specifically if the company has reduced operating rates.

Asian refiners are suffering losses producing gasoline and jet fuel as travel and social restrictions imposed by countries to curb the spread of the coronavirus globally have slashed demand for these fuels.

“Jet fuel and gasoline demand is low, so we are optimizing production based on demand. There is demand in diesel, so we will maximize diesel,” the SPRC official said.

Some refiners have started blending jet fuel into the diesel pool to reduce excess supplies.

“If there are export demands and the margins are good, we would produce, but there is not a lot of export demand. Domestic demand is limited,” she said. (Reporting by Shu Zhang, Roslan Khasawneh and Jessica Jaganathan in Singapore, and Chayut Setboonsarng in Bangkok; Writing by Florence Tan; Editing by Raju Gopalakrishnan and Richard Pullin)

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