SET-listed PTT Plc, the country's oil and gas conglomerate, is about to increase its five-year capital expenditure (capex) amount, expecting to spend more on innovations that would generate additional sustainable revenue.
The revision of the five-year spending plan, through 2020, is due to be finalised by year-end, president and chief executive Tevin Vongvanich told the Bangkok Post.
"We are working on it, adjusting it to match the operating environment. I expect we will need to increase capital expenditure to spend more in creating innovations," he said.
PTT previously set aside 297 billion baht for its five-year capex from this year to 2020, with most of the budget for developing oil and gas facilities. This was aimed at securing the country's energy supply, especially the development of gas pipelines that will link and transport gas from Myanmar to Thailand's eastern region.
In August PTT announced a cut in this year's capex from 50.8 billion baht to 43.3 billion, in line with lower global oil prices.
However, 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 the additional capex was unlikely to be large, raising the budget for research and development, especially in human resources to create new businesses that would help generate more revenue for the company.
"We have invested substantially in human resources since we offered several youth scholarships, and we will let them brainstorm to innovate and come up with new business models," he said.
Mr Tevin said the business plan calls for being open to every style of business. New business models should be effective and lead to a new S-Curve economic cycle, as prescribed by the government, for the company.
"We have not figured out the format for new business models. They could be startups or created from venture capital. We need to diversify into competitive businesses with innovation that creates certain revenue as oil revenue remains low," he said.
Mr Tevin believes global oil prices will remain relatively low level even after Opec decided in September to cut its aggregate output by 700,000-800,000 barrels per day to 32.5 million to 33 million.
He said the move supports oil prices rising slightly in the short term, but they are unlikely to exceed US$100 a barrel in the next few years. PTT estimates global oil prices will move in a range of $60-$70 a barrel over the next three years, said Mr Tevin.
PTT shares closed yesterday on the SET at 337 baht, up 2 baht, in heavy trade worth 2.78 billion baht.