What happened?

On the 11th September TASCO informed to the market:

  • The company was contacted by the US Embassy in Thailand that 3 weeks ago the US State Department asked them to stop procuring crude oil from Venezuela by the end of Nov 2020. And if they don’t they may face US sanctions.

Source: https://www.set.or.th/set/newsdetails.do?newsId=15997807571200&language=en&country=US

Why does this matter?

  • Their main asphalt refinery in Kemaman, Malaysia since it commissioned in 2007, 90% of the feedstock was sourced from Venezuela.
  • This refinery produces half of the asphalt supply for the company.
  • It will have to be temporarily shut down until they find another source that their refinery can utilise.

So what?

I found this interesting mainly because:

1) Geopolitics is going to be a far more component of risk for the coming years and here is a perfect example

2) At a certain price the company will be attractive again (it’s dropped some -35%), sourcing oil isn’t an issue, it will probably take time for the company to re-start their refinery (it’s not just flipping on/off a switch) as modifications may be required, but question marks will come re the potential higher cost for sourcing crude.

3) This name was a former darling of mine in 2013-2014. So I naturally pay attention to it…

12m share price

  1. Patrick, the US is too big a voice in exports, Thailand has to always good relations with them, it’s not time for any change now.

    Thailand will continue the policy of keeping one foot in both camps, but USA pressure against China will increase (Biden/Trump same same).

    Then who know what can happens.

    Before the United States loses its leadership as the first superpower for China, it won’t be a friendly exchange.

  2. Hi Khun Pon, excuse me for this. I have that aweful app Ad-Aware, which I cannot get rid of, no matter what I try. As a result, I cannot make my search requests date driven. Could you direct me to anything recent published about the PTTOR offering by PTT. Thanks.

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