Friday May 27, 2005, 2:23 pm - BANGKOK (Dow Jones)--The board ofpetrochemical producer Thai Olefins PCL (TOC.TH) has approved a plan toinvest in a $119 millionproject to produce methyl ester and fatty alcohol,the company said Friday. The project is expected to have a debt-to-equityratio of 1:1.

The project, which will use palm oil as feed stock, will have an annualcapacity of 215,000 tons a year and is expected to commence commercialoperation in the second quarter of 2007, the company said in a statementto the Stock Exchange of Thailand.

In accordance, the company's board has agreed to establish ThaiOleochemicals Co., a wholly-owned unit with registered capital of THB2.4billion, as an investment vehicle for the project.

"The project would help the company diversify its investment portfoliointo chemicals and fuel and also diversify investment risks," Thai Olefinssaid in the statement.

Fatty alcohol is an important basic raw material for the oleochemicalsindustry, which produces chemicals used in health and personal careproducts. At present, there is no domestic production of fatty alcohol,the statement said.

Methyl ester is an additive that can be mixed with diesel oil to improvethe quality of the diesel.

The company will supply methyl ester to oil and gas conglomerate PTT PCL(PTT.TH) so that PTT can use the product to mix with conventional dieseland become the first bio-diesel producer in Thailand.

Separately, Thai Olefins' board has also agreed to set up two wholly-ownedunits - Thai Ethanolamines Co. and Thai Choline Chloride Co. - asinvestment vehicles for two other recently approved investment projects.

Thai Ethanolomines, with registered capital of THB900 million, willproduce ethanolamines with an annual capacity of 50,000 metric tons whileThai Choline Chloride, with registered capital of THB560 million, willhave an annual production capacity of 20,000 metric tons.

Ethanolamines are used for the production of hair conditioners, fabricsofteners, cosmetics and pharmaceuticals, while choline chloride is usedfor animal nutrient products.

The two projects are scheduled to start operations in the first quarter of2007.