He said the company had not officially discussed the proposal with Esso executives. Local media reports said the Thaioil board had appointed a financial adviser to conduct due diligence on acquiring assets of Esso (Thailand) for about 50 billion baht.

Esso said in a statement to the Stock Exchange of Thailand yesterday that its policy was to not comment on rumors or speculation.

However, Mr. Surong insisted that TOP needed to enhance its competitive edge over Asian oil refinery by seeking further alliances.

The company's strategic policy is to study long-term growth opportunities to expand its business while ensuring good returns for investors, he added.

"We are interested in Esso since our location is next door (in Si Racha, Chon Buri) and we could find good potential for the oil business in the future," said Mr. Surong.

TOP currently has total refining capacity of 275,000 barrels per day, and Esso 177,000 barrels. An industry source said the deal, if achieved, would enable TOP to become Southeast Asia's biggest oil refiner, larger than the Shell operations in Malaysia and Singapore.

TOP could also gain value-added products from aromatics for which demand in Asia is rising sharply.