TASCO Tumbles after US Orders Refinery Shut Down, Expecting a 50% Loss in Revenue!

TASCO Tumbles after US Orders Refinery Shut Down, Expecting a 50% Loss in Revenue!

TASCO’s stock tumbled after the US forced the company to shut down Kemaman refinery in Malaysia, coupled with the order to stop purchasing crude oil from Venezuela. The US also warned that the company could face a sanction if not compromised. The analyst expected an impact to TASCO’s share price as TASCO would lose around 50% of its revenue, suggesting to keep a close watch on this situation as it could impact TASCO significantly.  

 

Mr. Chaiwat Srivalwat, Chief Executive Officer of Tipco Asphalt Public Company Limited (TASCO), revealed that the US State Department has contracted the company and asked TASCO to stop the procurement of Venezuela crude oil immediately. The company has shared with them in writing details of the procurement of Venezuela crude oil, however, after review of TASCO comprehensive written explanation, the US State Department requested the company to wind down the crude oil procurement from Venezuela by the end of November 2020, warning the company that, in the event of non-compliance, TASCO could be subject to US sanction.

     

In order to avoid the sanction, TASCO is taking steps to comply with such request. Therefore, the Kemaman refinery will have to shut down temporarily until the sanctions against Venezuela are lifted or the company finds an alternative feedstock.    

 

In December 2019, TASCO was contracted by the US Embassy in Thailand and the company has shared with them in writing details of the procurement of Venezuela crude oil in January 2020. 

 

The refinery in Kemaman, Malaysia is specifically designed to refine heavy crude oil from Venezuela. Since its commissioning in 20019, 90% of the refinery’s feedstock was sourced from Venezuela.

 

Krungsri Securities analyst Chaiyos Jiwangkul told “Kaohoon Turakij” that the aforementioned event has given a negative sentiment on TASCO as the revenue from Malarsian refinery accounted for approximately 50% of total company income. Therefore, analyst suggested avoiding to pick up TASCO’s stock until the situation cleared. 

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