Asia Oil Explorer
G lobal olefin prices at record levels
􀂄 Higher oil prices are pushing up global olefin prices to record levels
With close to breakeven naphtha cracker margins today, higher naphtha costs will
likely translate to higher ethylene prices. We believe PTT Chemical (PTTCH) is
unique and “feedstock-advantaged” in this context as its cost base is linked to
cheap gas prices in the Gulf of Thailand. We believe sustained high oil prices will
help shield PTTCH from the expected downturn in the olefin cycle in 2009 and
2010.
􀂄 Resumed coverage of GAIL (India) Ltd. with a Sell rating
We resumed coverage of GAIL with a Sell rating and a price target of Rs370.
GAIL plans to expand its gas pipeline network in FY08-12 but we think its
expanded network may be underutilised in its initial years of operation due to lack
of adequate gas supplies.
􀂄 Initiated coverage of Esso (Thailand) with a Sell rating
We initiated coverage of Esso (Thailand) with a Sell rating and a 12-month price
target of Bt8.90. Esso is Thailand’s third largest refiner with a refining capacity of
177,000bpd. We believe Esso’s high dividend payout has supported the share price
since listing on 6 May 2008. However, we note the shares will go ex-dividend on
17 June 2008.
􀂄 Still bullish upstream on record oil prices
In the current scenario of high oil prices, we prefer exposure to upstream stocks in
Asia including PTT Exploration & Production, Cairn India, and ONGC over
downstream stocks. Unlike other chemical producers in the region, we believe PTT
Chemical is a unique beneficiary of high oil prices
Global Equity Research
Asia Pacific Ex. JP
Oil Companies, Major
Sector Comment

Contents page
UBS forecasts 5
Product price & margin 6
— Crude oil price & spread.......................................................................................6
— CFTC traders’ report ............................................................................................8
— Olefins .................................................................................................................9
— Olefin derivates ..................................................................................................10
— Upstream aromatics ...........................................................................................12
— Midstream/downstream aromatics......................................................................13
— Vinyls chain........................................................................................................14
US refining inventory & utilisation 15
US refining margins 17
Singapore refining inventory 18
Japan refining inventory 19
Refining margins & spreads 21
Recent oil & chemical reports 22
Stock performance & valuations 23
— China .................................................................................................................23
— Taiwan ...............................................................................................................25
— Thailand.............................................................................................................27
— Korea .................................................................................................................29
— India...................................................................................................................31
— Other Asia Pacific Countries...............................................................................35
— Solar stocks .......................................................................................................36
Valuations: Oil & Chemicals 37
Recent notes 43
— Esso (Thailand) PCL..........................................................................................44
— GAIL (India) Ltd..................................................................................................45
— PTT Chemical ....................................................................................................46