* Bangchak shuts 120,000 bpd refinery after a fire
* Plans to restart 40,000 bpd crude unit after one week
* Bangchak may import 15,000 bpd of light fuels
* Shares down as much as 3.8 percent
(Recasts, adds details from news conference, comments)
By Pracha Hariraksapitak and Pisit Changplayngam
BANGKOK, July 4 Thailand's Bangchak Petroleum
Pcl declared force majeure on crude imports after a
fire on Wednesday forced its refinery in central Bangkok to shut
down, adding more oil into an already well-supplied Asian
The refinery processes mainly domestic crude, and buys some
light sweet Malaysian and Vietnamese grades. Asia is struggling
with excess sweet crude as weak demand in Europe and surplus
shale oil in the United States is constantly pushing supply from
the Atlantic Basin to the east.
A force majeure is a clause provided in contracts where
buyers or sellers are allowed to renege on their commitment
because of a situation that is beyond their control. It is
typically declared in the event of a fire or natural calamities
such as flooding and earthquake among others.
"We will also have to sell crude oil, which is coming ashore
as we don't have ample storage and capacity to refine after the
fire," Wattana Opanonamata, senior executive vice-president,
Bangchak has shut its 120,000 barrels per day (bpd) plant
for one week as the fire damaged a crude distillation unit.
The damaged unit, with a capacity of 80,000 bpd, will remain
shut for at least 30 days for investigation, while the smaller
40,000 bpd unit and a hydrocracker unit will be restarted after
a week, President Anusorn Sangnimnuan told reporters. The
shutdown of the bigger CDU may extend to two months, he added.
The company would now target to produce an average of 90,000
bpd after the fire from the refinery, compared with an earlier
plan for 94,000-95,000 bpd, Wattana said.
Yet, Bangchak expects to continue with oil products sales in
the country without any disruption from the fire to the 50-year
old refinery, Anusorn said.
"In terms of business, we continue to sell our oil products
at petrol stations as normal," he told reporters at a news
conference. "The fire should have limited impact on our
To ensure uninterrupted supply across its retail network the
company may have to seek products from Thailand's top energy
firm PTT or turn to imports, traders said.
IRPC Pcl has already postponed a maintenance
shutdown at its refinery, parent PTT group said, to help a
possible shortage after the Bangchak fire.
Bangchak said it may import 15,000 bpd of light fuels
following the fire. Gasoline is a light fuel.
Gasoline may be the only fuel Thailand may need to import
because supply and demand of the product in the country is
finely balanced and hence vulnerable to sudden disruptions, a
Thai industry source told Reuters.
The unexpected demand from Thailand may help support the
gasoline market, which fell to a six-session low of $4.33 a
barrel on Tuesday on slow demand.
The diesel market will be less affected as demand is
typically low during the monsoon. Diesel is used by farmers to
run tractors and water pumps to irrigate fields.
The company cancelled a spot tender to sell low sulphur waxy
residue for July-loading, traders said. The tender to sell
30,000 tonnes for July 20-22 loading was to close on Wednesday.
The cancellation may help lift the fuel oil regional market
that was at a one-month low on Wednesday.
Shares in Bangchak dropped after the news of the fire, and
broker Krungsri Securities said the fire may hurt the company's
"We initially expect the fire to have an impact on its third
quarter earnings ... Given that the company has insurance
coverage for all risks and business interruption, we think the
impact should be limited," it said in a research note.
Bangchak shares fell as much as 3.8 percent to 22.5 baht,
while the broader Bangkok market shed 0.6 percent.
The company had last shut a hydrocracker unit at its Bangkok
refinery in January 2011 for a month for maintenance after a
fire in a unit that upgrades fuel oil to diesel.
(Additional reporting by Khettiya Jittapong, Apornrath
Phoonphongphiphat, Wilawan Pongpitak, Florence Tan, Jessica
Jaganathan and Lee Yen Nee in Singapore, Writing by Manash
Goswami and Ramya Venugopal; Editing by Himani Sarkar)