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PTT Global rating not affected by potential U.S. investment

FE Online Desk | Published: January 31, 2018 13:26:48 | Updated: February 01, 2018 09:54:36


SINGAPORE (S&P Global Ratings) Jan. 31--S&P Global Ratings said today

that its rating and outlook on PTT Global Chemical Public Co. Ltd. (PTTGC:

BBB/Stable/--) are not affected by the company's potential investment in an

ethylene cracker project in the U.S. The project is still at the planning

stage and its impact on PTTGC's operations and finances will likely show only

in 2020 and beyond--if the Thai chemicals producer proceeds with the

investment. PTTGC expects to take the final investment decision in 2019.

 

PTTGC has signed a 50/50 heads of agreement with Korean conglomerate Daelim

Industrial Co. Ltd. for the project. Daelim will conduct a feasibility study

of an ethylene cracker plant, with total capacity of 1.5 million tons per year

and a downstream polyethylene facility, to be built in the state of Ohio in

the U.S. It includes the front-end engineering design; engineering,

procurement, and construction bidding; and funding of the project.

 

"We would regard the U.S. ethylene cracker project as marginally negative for

PTTGC's earnings during the construction phase. That is because of the

inherent execution risks associated with projects of this scale, especially in

a geography in which the company has no operations. Also, it's too early to

gauge if such projects can retain their currently solid profitability beyond

the next five years, amid a flurry of capacity additions in the U.S. over the

next three years," said a statement.

-rmc//

 

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