Rayong: PTT Plc, the national oil and gas conglomerate, hopes that the newly approved median price for liquefied petroleum gas (LPG) will improve the efficiency of fuel usage and oil refinery operations.
A worker unloads cooking gas canisters for home delivery. Prices of LPG for household and industrial use will be the same next month, in accordance with the new median price set by the Energy Ministry. KRIT PROMSAKA NA SAKOLNAKORN
"The decision to apply the median price of LPG across the board will lead to greater efficiency, especially in the market where it can move freely based on demand and supply. Once consumers acknowledge the actual cost to their wallets, they will be more considerate in their usage," said Pailin Chuchottaworn, PTT president and chief executive.
"Refineries will also become more profitable as the new LPG price encourages them to produce more," he said.
The median price is determined from the cost of LPG from three major sources: imported LPG, local gas separation plants and oil refineries.
Natural gas from the Gulf of Thailand is beginning to decline. The Energy Ministry expects reserves to last around seven years without finding new sources.
Gas from Myanmar, which has been a major supplier for Thailand for more than a decade, is poised to be used more for domestic purposes. Imports of liquefied natural gas (LNG) will make up the difference.
Nuttachat Charuchinda, PTT's upstream petroleum and gas business group chief operating officer, expects long-term contracts to account for 70-75% of imported LNG, with spot purchases making up the remainder.
LNG imports for 2015 are expected to reach 2.5 million tonnes, up from 2 million tonnes in 2014.
PTT yesterday received the first shipment of LNG from Qatargas of about 90,000 tonnes under a 20-year sales and purchase agreement, which was signed in 2012.
Under the deal, Qatargas will supply 2 million tonnes of LNG to PTT annually.
"The price under the agreement is linked to the price of oil. With the oil price in Dubai below US$50, the price of LNG will sink below $10 in two to three months," said Mr Pailin.
PTT hopes to sign more contracts with other countries such as the US and Australia to diversify the country's sources of supply.
Mr Pailin said the falling oil price would affect PTT in the short term, but the diversification of PTT's interests would mitigate the effect in the long run.
Qatargas is a state majority-owned company and the world's largest producer as well as the world's largest exporter of LNG. It has a production capacity of 77 million tonnes per year, or 33% of global sales of LNG.
PTT shares closed yesterday on the Stock Exchange of Thailand at 340 baht, up six baht, in trade worth 3.58 billion baht.