PTT steers around oil plunge

PTT steers around oil plunge

National oil conglomerate PTT Plc hopes to turn crisis into opportunity by making more mergers and acquisitions, focusing on energy resources and companies whose offer prices have fallen as their performance has been affected by the decline in oil prices.

Chief financial officer Wirat Uanarumit said PTT was currently revising up capital expenditure for 2015-19 to take into account such opportunities.

There are a few factors that PTT hopes will help it cushion the impact of the declining oil price, including its 22.7% shareholding in the state-majority oil refiner, Bangchak Petroleum, which is likely to close a deal soon, and another oil refinery, Star Petroleum Refinery.

The oil refinery business is directly affected by oil prices.

Another positive factor is that the output of its other subsidiary, PTT Exploration and Production Plc, is nearly 70% natural gas, reducing the impact from crude oil compared with other E&P businesses that produce crude as the main product.

Mr Wirat said the oil price might settle within a range of US$60-80 per barrel in 2015.

PTT chief executive Pailin Chuchottaworn said the group learned hard lessons from previous global oil crises, so it is well prepared to handle another crisis.

Mr Pailin said the world had more choices, citing natural gas as a major energy that people consume.

"Besides being competitively priced, natural gas is cleaner and causes less emissions than conventional crude oil," said Mr Pailin.

The oil price is in a declining cycle partly because it had remained overpriced at more than $100 a barrel since 2009, so it is time it fell to an optimum level, he said.

"If you look at all the conditions and relevant factors you will see that there is no economic crisis that can cause a crash in prices compared with past crises that had obvious factors like the subprime crisis. So what else could really pressure the oil price," said Mr Pailin.

"The high prices set by global major players cannot be maintained too long. Also there is gas supply in the market that can act as a benchmark price," he added.

PTT shares closed last Tuesday on the SET at 324 baht, down two baht, in trade worth 912 million baht.

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