The ratings on Thai Oil Public Co. Ltd. (Thaioil) reflect the support the company continues to receive from its operational integration with, and strategic importance to, state-owned oil and gas conglomerate PTT Public Co. Ltd. (BBB+/Negative/--). The ratings also reflect the company's favorable cost structure, flexibility in feedstock selection, and strong domestic market position. These strengths are partially offset by Thaioil's single-site and customer concentration risks, inherent industry risks, and the weak outlook for the refinery and aromatics industries. In our view, Thaioil's business risk profile is satisfactory. The company's low cash costs allowed it to continue operating at full capacity despite the weaker gross refining margin environment. The challenging operating environment resulted in the closure of many high-cost refineries.
