Thailand Can Up Oil Reserves to 64 Days if Middle East Supply Threatened

---

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--With an eye on the continuing volatile situation in the Middle East, the government in Thailand is taking measures to build oil and refined product reserves.

The first move has been to ask oil refiners to make a voluntary effort to increase inventories. Other measures being held ready to cut consumption include a ban on crude and refined product exports and a relaxation of fuel standards.

The country's average daily crude import in 2011 was more than 800,000 barrels. Arak Chonlatanon, Thailand's energy minister, has said that refiners are capable of increasing inventory to cover supplies for 64 days, up from the current 55 days.

The Energy Business Department Director General Viraphol Jiraprad-itkul said that refiners were currently required to stock crude at 5% of refining capacity, which is enough for 18 days consumption. Refined stocks ready for use would last about 12 days, although this excludes problems of quality, which may lead to more refining. But with working reserves, the total inventory would last around 23 days.

Including about 8.45 million barrels of oil in transit, refiners are required to stock refined oil to cover 19 days of consumption.

Reacting to the need for supply security, Thai Oil has switched from spot purchases to long term contracts and is beginning an inventory build-up and preparing unused tanks for reserves.

Under the pressure of sanctions, Iran has threatened to close the Strait of Hormuz, the narrow sea passage between the Persian Gulf and the Arabian Sea, and cut of the movement of about 20% of global oil shipments, which could push the price of a barrel to $200 or more depending on the severity of the crisis and the possibility of military exchanges. No doubt Thailand's contingency moves are being replicated by many governments in Southeast Asia, especially those with a high dependence on oil imports.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.