State-owned Thai Oil Group’s base oil business reported increased net profit and sales for the fourth quarter and the full year of 2021, with sales enjoying a lift from higher volume and prices.
Net profit increased 17% to 457 million baht (U.S. $14 million) in the fourth quarter, compared to 390 million baht in the same period in 2020. Sequentially, fourth-quarter net profit dropped 54% from 1 billion baht in the third quarter. The base oil price spread over fuel oil declined in the fourth quarter “owing to higher supply since regional refineries boosted their production, and refineries resumed their operations after annual maintenance shutdowns,” the company noted in its earnings discussion and analysis.
For the full year, net profit increased more dramatically, by 304%, to 3.7 billion baht, rising from 910 million baht in 2020. The 2021 net profit represents a 245% improvement over the 1.1 billion baht reported for 2019.
Fourth-quarter sales revenue rose 59% to 6 billion baht. This was thanks to increases in average selling prices, which rose in line with crude oil values, the company said.
For the full year, revenue surged 70% to 23.8 billion baht in 2021, up from 14 billion baht. This was also a 31% improvement on 18.2 billion baht in 2019. The company attributed the much better performance to increases in both total product sales volume and average selling prices, as well as a much greater base oil spread over fuel oil because of tighter supply.
The company noted that in 2021, the price for 500 solvent neutral base oil tracked higher than crude oil prices. “Moreover, its spread over fuel oil improved from a recovery in demand and tight supply since refineries could not resume their operations, and there were more annual maintenance shutdowns,” the company said in its report
The company operates a base oil plant with 5,100 barrels per day of API Group I production capacity. Its base oils are used primarily in industrial and marine lubricants and in engine oils for older engines.
The plant’s base oil production rate was 88% of name plate capacity in the fourth quarter, down from 93%. For the full year, the base oil production rate was 91%, up slightly from 88% in 2020.