PTT eyes additional 1m tonnes of LNG

PTT eyes additional 1m tonnes of LNG

Stepped up import aims to secure supply

The PTT logo sits atop a petrol station near the company's headquarters on Vibhavadi Rangsit Road. Depleting natural gas in the Gulf of Thailand is one main reason why PTT is importing more liquefied natural gas. PATIPAT JANTHONG
The PTT logo sits atop a petrol station near the company's headquarters on Vibhavadi Rangsit Road. Depleting natural gas in the Gulf of Thailand is one main reason why PTT is importing more liquefied natural gas. PATIPAT JANTHONG

PTT Plc, the national oil and gas conglomerate, is looking to import an additional 1 million tonnes of liquefied natural gas (LNG) a year under a long-term contract in order to secure supply of the gas.

The company currently has a long-term contract to buy 2 million tonnes a year from Qatargas while its expanded LNG receiving terminal in Map Ta Phut will soon have a storage capacity of 10 million tonnes a year, up from 5 million.

The new receiving terminal is expected to start operation by early next year.

President and chief executive Tevin Vongvanich said PTT will purchase the additional 1-1.3 million tonnes of the gas a year in total from several gas suppliers. The negotiations are expected to be finalised by September.

Another factor forcing the company to import more LNG is depleting natural gas in the Gulf of Thailand, while the plan to diversify power sources to rely less on gas and switch to coal is still staunchly opposed by environmental activists.

The company planned to import of 3 million tonnes of LNG this year, rising to 5 million next year, he said.

PTT yesterday announced a cut in capital expenditure this year from 50.8 billion baht to 43.3 billion in line with the lower global oil price, which has fallen from US$54 per barrel earlier this year to $40.

Most of the capex cut will be from a gas separation unit worth 3 billion baht. Some 450 million baht will be slashed from the gas facility budget and the rest will be shed from the offshore compressor and hybrid natural-liquid gas project.

However, the five-year capex remained unchanged at 297 billion baht and most of the projects will be postponed to start during the middle and final stages of the plan.

Some 55% of the total budget will be for infrastructure, 15% for the LNG business, 13% for gas and 8% for mergers and acquisitions and the oil trading section.

Capex for the whole PTT group will remain at 900 billion baht from this year to 2020, including upgrading oil refineries, petrochemical cracker units, oil storage expansion, gas pipeline expansion and expansion of LNG receiving terminals, Mr Tevin said.

He said PTT expected the recent launch of the state Oil Fund Act would help end the huge subsidy for cooking gas and compressed natural gas during times when oil prices surged.

The subsidy has dropped from around 20 billion baht a year to 3 billion this year.

The subsidy for gas is likely to be completely terminated by next year, when it will be switched from a universal subsidy to a subsidy only for the poor, said Mr Tevin.

PTT posted a 4.8% rise in net profit in the second quarter to 24.9 billion baht.

In the first half of the year, net profit also rose 4.8% on year to 48.5 billion baht because of the recovery in oil prices, rising refinery margins and petrochemical prices, he said.

Regarding the outlook for oil prices, Mr Tevin said they would stay in the range of $42-$46 a barrel in the second half, up from an average of $37.1 a barrel at the end of June.

PTT shares closed yesterday on the SET at 347 baht, up five baht, in trade worth 948 million baht.

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