Thai Oil Public Company Limited (TOIL) has announced that the hiring of the main contractor for the Clean Energy Project (CFP) was transparent, and is committed to completing the CFP as soon as possible and pushing for UJV – Samsung, Petrofac and Saipem to pay the outstanding compensation to each subcontractor.
Thai Oil Public Company Limited explained that the Clean Energy Project (CFP) is an oil refinery expansion project that uses advanced technology (Complex Refinery) to increase oil refining capacity and create energy security for the country. It is a large-scale investment project that requires a large amount of investment, so it is necessary to hire a company with specialized expertise. In Thailand, there is no company that can do this. Thai Oil has started studying the feasibility of the CFP project since 2014, starting with the design of the production process and preliminary engineering design.
In 2015-2016, in order to obtain sufficient information to issue an invitation to bid for the CFP projec
t’s Engineering, Procurement and Construction (EPC) contractors, in 2016 Thaioil examined the qualifications of bidders in accordance with a transparent procurement process that complies with the principles of corporate governance, with standard criteria such as financial statement analysis. Financial ratios, experience, etc., which appeared that the companies 1. Petrofac International (UAE) LLC, 2. Samsung Engineering Co., Ltd., and 3. Saipem SPA were selected and entered into the said EPC contract with Thaioil in 2018 on behalf of The Consortium consisting of PSS Netherlands BV, (Offshore Contractor) and UJV – Samsung, Petrofac and Saipem (Onshore Contractor), whereby the parent company of The Consortium (PSS Netherlands BV, (Offshore Contractor) and UJV – Samsung, Petrofac and Saipem (Onshore Contractor)), namely 1. Petrofac Limited 2.Samsung Engineering Co., Ltd. and 3. Saipem SPA (‘Parent Company’), issued a letter of guarantee for the performance of the entire contract of The Consortium.
We would like
to clarify that the gathering of the federation in front of the Thaioil refinery in Sriracha District, Chonburi Province on October 18, 2024, has affected Thaioil’s operations in the area, but has not caused the CFP project to be postponed indefinitely as some media outlets have reported. In the past, Thaioil has paid compensation to UJV – Samsung, Petrofac and Saipem in accordance with the terms and conditions specified in the EPC contract in full and correct manner continuously. However, UJV – Samsung, Petrofac and Saipem have not paid the outstanding compensation to the subcontractor company,’ Thaioil stated.
However, Thaioil is aware of the Federation’s distress from not receiving outstanding compensation and has made every effort to push UJV – Samsung, Petrofac and Saipem to pay outstanding compensation to subcontractors, such as allowing UJV – Samsung, Petrofac and Saipem to collect compensation from Thaioil based on the actual completion of the work instead of paying based on the completion of each pa
rt according to the plan specified in the contract from mid-2020 to early 2024, including paying wages as soon as possible within the period specified in the contract to support financial liquidity from mid-2022 to mid-2024.
In addition, Thaioil has discussed and requested that UJV – Samsung, Petrofac and Saipem agree to allow Thaioil to deduct the compensation under the EPC contract in the amount that UJV – Samsung, Petrofac and Saipem are entitled to receive from Thaioil according to the work period to pay to the subcontractor directly, but UJV – Samsung, Petrofac and Saipem have not yet agreed. However, in providing assistance to the subcontractor, Thaioil must still take into account that Thaioil is not a direct contracting party to the subcontractor, and therefore cannot interfere in any way with the contract between the subcontractor and UJV – Samsung, Petrofac and Saipem. In addition, UJV – Samsung, Petrofac and Saipem have also stated in writing that Thaioil shall not interfere with the contract betw
een UJV – Samsung, Petrofac and Saipem and the subcontractor.
Thaioil would like to reaffirm that Thaioil is committed to conducting business in accordance with the principles of corporate governance and aims to complete the CFP project as soon as possible, giving importance to all stakeholders. Thaioil will continue to push for UJV – Samsung, Petrofac and Saipem to pay the outstanding remuneration to the subcontractors under the contracts between UJV – Samsung, Petrofac and Saipem and each subcontractor.
Reporters reported that the CFP project helps increase the competitiveness of Thaioil Refinery by expanding the refining capacity from 275,000 barrels per day to 400,000 barrels per day, with an investment of approximately 4,825 million US dollars. The project has been in operation since 2019. During the construction, there were impacts from the handover of work and hiring of workers during COVID-19. Recently, there was a problem of the main contractors not paying wages to the contractors during the labor
rally, even though Thaioil had already paid wages to the main contractors. Analysts expect that this will affect the CFP construction plan, which is expected to be completed in 2025.
Mr. Prin Nikornkittikosol, Director of Securities Analysis, Yuanta Securities (Thailand), said that the share price of TOP has adjusted downward, expected from concerns about the CFP, while TOP has not yet announced a postponement of the opening of the CFP project and confirmed that it has paid compensation to UJV-Samsung, Petrofac and Saipem in full all along. In addition, it is expected that TOP’s performance in Q3/67 will have a net loss of approximately 3,500 million baht, recognizing a loss from oil stock (Stock Loss) of approximately 7,500 million baht, following the rapid decline in crude oil prices and an 8% decrease in refining margin compared to the same period last year.
Source: Thai News Agency