ExxonMobil inks deal to shed Thai refinery, related assets

Bangchak Corp. Public Co. Ltd. (BCP) has entered an agreement to purchase ExxonMobil Corp. affiliate ExxonMobil Asia Holdings Pte. Ltd.’s interest in Esso (Thailand) Public Co. Ltd. (ETL), which operates the 167,000-b/d Sriracha refinery in Laem Chabang, Sriracha District, Chon Buri Province, Thailand.

Following unanimous approval by its board on Jan. 11, BCP agreed to acquire ExxonMobil’s 66% majority stake in ETL in a deal that, once finalized, would give the operator control of ETL’s Sriracha refinery, a network of distribution terminals, and more than 700 ETL-branded service stations, BCP and ExxonMobil said in separate releases.

After completing the proposed share purchase agreement with ExxonMobil—which, pending necessary shareholder and regulatory approvals, is scheduled to occur in third-quarter 2023—BCP would launch a subsequent tender offer to acquire the remaining 34% of ETL’s ordinary shares to take full ownership of the assets, the operator said in a Jan. 12 filing to Stock Exchange of Thailand (SET).

Based on ETL’s third-quarter 2022 financial results and still subject to adjustments, BCP estimated its purchase price for ExxonMobil’s ETL shares would amount to about 55.5 billion baht ($1.47 billion), or 8.84 baht/share. Acquisition of remaining ordinary shares in the subsequent tender offer would be purchased at the same final price per share as determined at closing of the ExxonMobil transaction, BCP said.

ExxonMobil’s planned divestment of ETL comes as part of a program launched in 2021 to reduce Scope 1 and 2 greenhouse gas (GHG) emissions of its operations by 2030 from 2016 levels to help achieve Scope 1 and 2 net-zero GHG emissions by 2050.

“As we execute our strategy, ExxonMobil is focusing its investments on global production facilities to meet the world’s demand for lower-emissions fuels and high-performance products, while divesting assets where others see the potential for greater value,” said Karen McKee, ExxonMobil’s president of product solutions.

Despite shedding the Sriracha refinery and related ESL assets, ExxonMobil said it will retain its branded finished lubricant and chemical marketing businesses in Thailand under a newly formed but yet-to-be name company. ExxonMobil’s upstream operations through affiliate ExxonMobil Exploration and Production Khorat Inc.—which operates an onshore gas production plant in Nam Phong, Khon Kaen Province, and holds an interest in the Sinphuhorm concession 60 km north of Nam Phong field—and ExxonMobil Ltd.’s Bangkok Global Business Center will not be impacted, the company confirmed.

For BCP, acquisition of ETL’s refining and related assets marks “a step towards greater energy security, balancing [the operator’s] long-term strategy with energy affordability and sustainability,” said Chaiwat Kovavisarach, BCP’s chief executive officer and president.

ETL acquisition benefits, overview

Combined with its existing 120,000-b/d refinery at Phra Khanong, Bangkok, and current network of branded service stations, BCP’s proposed ETL purchase will position the operator to provide increased fuel-supply security for Thailand via an enlarged distribution footprint, as well as reduce its volumes of imported product. The acquisition will also create synergies to help improve operational capabilities and increase production flexibility, both of which contribute to enhanced business competitiveness and cost savings that generate additional cash flow to expedite the company’s energy transition initiatives, BCP said in its SET filing.

Alongside increased nameplate crude processing capacity offered by ETL’s Sriracha refinery—including 43,000 b/d of FCC capacity—BCP will acquire:

• Integrated chemical plants with a combined aromatics capacity of 500,000 tonnes/year.
• Two wholly owned terminals (Sriracha, Lampang).
• Three joint-venture terminals (Lumlukka, Suratthani, Songkhla).
• A 21% interest in Thai Petroleum Pipeline Co. Ltd.’s Thappline pipeline system, which provides petroleum pipeline transportation service on three main routes (Sriracha-Saraburi pipeline, Map Ta Phut-Sriracha pipeline, Lumlukka-Suvarnabhumi pipeline).
• A 7.06% interest in Bangkok Aviation Fuel Services Public Co. Ltd., which provides aviation fuel services at Bangkok International Airport.

In a Jan. 12 presentation to investors, BCP said it expects the ETL acquisition to deliver estimated annual run-rate, pre-tax synergies of 1.5-2 billion baht.