PTT Global Chemical Plc (PTTGC), the country's biggest petrochemical maker, may raise its budget for a facility in Indonesia after a change in its partner's investment plan.
President and chief executive Bowon Sinudom said the joint venture with Indonesian's oil flagship, PT Pertamina, previously called for co-investing in an olefin cracker worth US$5 billion.
A feasibility study revealed a better course of expanding the complex's oil refinery at the same time.
As a result, PT Pertamina will change its plan from investing only in petrochemicals to also increasing capacity at the oil refinery on Java from 125,000 barrels per day to 360,000.
The expansion of the oil refinery alone would cost $3 billion, therefore the total investment would be $8 billion.
Mr Bowon said greater output from the refinery would mean more liquefied petroleum gas and naphtha could be produced and the olefin cracker would have more feedstock without importing raw materials.
"Oil demand in Indonesia will jump over the next several years due to the momentum of its booming economy," he said. "Since the country has limited refining capacity, it tends to rely on imported refined oil."
The shareholding structure of the project has yet to be settled. The two partners may seek a third or fourth party to join in the massive investment.
The preliminary decision will be announced in early 2015, delayed from the end of this year.
Basic engineering designs and the final investment decision will be made some time next year, with construction expected to begin a year later.
If the project goes as planned, commercial production of 1 million tonnes a year of olefins will begin by 2020.
The next step after upstream olefins would be an intermediate-level petrochemical aromatics plant.
Patipan Sukorndhaman, executive vice-president for finance and accounting at PTTGC, said funding for the project will come from global import-export bank loans and from local banks.
PTTGC and PT Pertamina originally teamed up on a trading firm called PT Indo Thai Trading Co (ITT), with stakes of 49% and 51% respectively, to trade polymers in the local market.
This year ITT aims to gain sales volume of 48,000 tonnes before reaching 415,000 tonnes in 2018.
PTTGC reported second-quarter sales of 152.4 billion baht, up 36% year-on-year, and a net profit of 6.1 billion baht, up 46%, on the back of heavy demand for some petrochemical products and a strong gross margin in refining.
PTTGC shares closed on the Stock Exchange of Thailand yesterday at 65.75 baht, up 1.25 baht, in trade worth 840 million baht.