PTT Plc and its subsidiaries are planning more flexible investment over the next few years in order to reduce risks and costs as well as increase efficiency and strength at a time when global oil prices are forecast to stay low for a few years.
Chief executive Tevin Vongvanich said the oil and gas conglomerate had set aside 50.8 billion baht as an investment budget for 2016, focused mostly on securing Thailand’s energy stability.
That is part of a five-year capital expenditure budget of 299 billion baht, which was trimmed down from 300 billion set in mid-2015 due to falling oil prices that forced the company to revise its spending.
Mr Tevin said PTT would be flexible with its investment over the next five years by adjusting and delaying some upstream petroleum projects abroad.
In Thailand, it will continue to invest in liquefied natural gas (LNG) facilities, especially LNG terminals and a floating storage and regasification unit (FSRU) in order to improve the company’s potential to meet rising demand in the near future.
“Demand for gas is rising substantially, so we’ll continue to invest in gas facilities not only to meet rising demand but also to help secure supplies during gas disruptions when major gas blocks in Myanmar are shut down for maintenance,” Mr Tevin said.
He said the new LNG receiving terminals, especially the movable FSRU, would help to diversify gas supplies and transport gas from other resources from western Thailand directly to the major gas-fired power plant in Ratchaburi province and other plants in the central region.
“The FSRU is still undergoing a feasibility study, but it’s still in the plan that we’ll use,” Mr Tevin said.
In non-oil business, Mr Tevin said PTT would keep to its plan to expand its petrol stations and Cafe Amazon outlets, which are due to be introduced in neighbouring countries.
The group also plans to increase efficiency and cut production costs by restructuring the businesses of its subsidiaries, he said.
PTT chief financial officer Wirat Uanarumit said some business units should be merged to make the company’s operations more flexible.
Subsidiary PTT Exploration and Production Plc (PTTEP), the SET-listed upstream petroleum company, also intends to cut costs as well as delay some upstream petroleum projects abroad.
PTTEP has also cut its capital expenditure budget for the third time to US$2.09 billion from $2.5 billion and $3 billion to match declining oil prices.
President and chief executive Somporn Vongvuthipornchai said PTTEP had trimmed its cash cost of production to $40 a barrel and this year aimed at reducing it to less than $38.
If the oil price stays below $40 much longer, the company will delay the
exploration and development of its Cash Maple gas field in Australia, an oil sands project in Canada and the Myanmar M3 project.
However, its Rovuma A1 project in Mozambique will proceed with the development of an LNG facility that will start this year. It is due to become operational in 2020 with production of 12 million tonnes a year.
PTT Global Chemical Plc (PTTGC), the petrochemical arm of PTT, is maintaining its five-year plan costing 200 billion baht.
Chief executive Supattanapong Punmeechaow said the company was proceeding with a feasibility study to add feedstock to naphtha and expand downstream production in a $2-billion project in Map Ta Phut in Rayong.
It will also continue its olefins cracker production facility project in Ohio, which will be finalised by mid-year.
Shares of PTT and its subsidiaries closed mostly higher on the Stock Exchange of Thailand yesterday.
PTT shares rose 1.2% to close at 214 baht, up from 211 baht on Monday.
Shares of Thai Oil Plc (TOP) closed 0.39% higher to 65 baht, up from 64.75 baht on Monday, while shares of IRPC Plc rose 1.82% to close at 4.48 baht, up from 4.40 baht.
PTTEP shares fell 0.51% to close at 48.50 baht, down from 48.75 baht the previous day.