PTT seeks M9 delivery delay

ENERGY

PTT Plc, the national oil and gas flagship, has been negotiating with Burma to delay gas deliveries from Burma's M9 block by two years to 2015, citing lower-than-expected domestic gas consumption.

PTT Exploration and Production Plc (PTTEP), the upstream petroleum arm of PTT, aims to spend 70 billion baht on the M9 project over five years to 2013.

The delivery of M9 gas has already been put back from 2012 to 2013 but the Thai side now wants new gas to arrive from 2015, said Chitrapongse Kwangsukstith, chief operating officer for PTT's upstream petroleum and gas business.

"Earlier, we anticipated gas consumption in Thailand would grow by more than 10% a year over five years. But this year, for example, it will be flat as the economy slows," he said.

The price of M9 gas has been agreed at the same level as that from Burma's Yadana and Yetagun fields, although gas delivered from Burma through pipelines is normally priced higher than that pumped from the Gulf of Thailand due to transport costs, he said.

PTTEP currently pays an average of US$5.83 per million British Thermal Units (BTU).

The M9 block has clearly proven high gas reserves, which PTTEP puts at 1.7 trillion cubic feet, said Mr Chitrapongse.

PTTEP, which is 65.5% owned by PTT, was awarded the M9 block concessions in 2003 and began exploration activities in 2005. About 15% of the company's five-year capital expenditure of 485 billion baht has been allocated to M9 block activities.PTTEP has reserves of 944 million barrels of oil equivalent, of which 80% is gas and 20% oil. PTTEP's revenue of 140 billion baht last year came 65% from natural gas and 35% from oil.

In 2008 Thailand consumed 3,482 million cubic feet per day of gas, a third of which came from Burma, and 560 billion barrels of oil. Other foreign sources of gas are the Thailand-Malaysia Joint Development Area (JDA) and Indonesia's Natuna gas field.

Shares of PTT closed yesterday on the Stock Exchange of Thailand at 220 baht, up three baht, in trade worth 2.43 billion baht. PTTEP shares closed at 130.50 baht, up 5.50 baht, in trade worth 2.99 billion baht.