PTT looks to sell LPG to neighbours

PTT looks to sell LPG to neighbours

Auttapol: Feasibility study being done
Auttapol: Feasibility study being done

SET-listed PTT Plc is preparing to expand its liquefied petroleum gas (LPG) business to neighbouring countries as otherwise strong demand at home has started falling after the liberalisation of the sector.

PTT executive Mr Auttapol Rerkpiboon, vice-president of the oil business unit, said the national oil and gas conglomerate was doing a feasibility study on the retail LPG markets in Cambodia, Laos, Myanmar and Vietnam.

"Those countries have high demand for LPG, whose price, like oil, is relatively low," said Mr Auttapol.

The study will be conducted with PTT's wholly-owned subsidiaries in those countries: PTT Laos Co, PTT Cambodia Co and PTT Oil Myanmar Co.

For over a decade, large subsidies to keep the price of LPG below the cost of petrol during a global oil price surge distorted the market by encouraging motorists to switch to LPG. The move led to distortion in the domestic market, with the state Oil Fund and PTT incurring 10 billion baht annual losses from the subsidy.

Thai ex-refinery LPG prices were fixed at US$333 per tonne, far below the global propane price of more than $500 per tonne.

The retail price was also fixed at 18.13 baht per kilogramme, lower than prices in neighbouring countries of 25-30 baht per kg. PTT was subsequently forced to import additional LPG to meet rising demand.

The company imported around 70,000 tonnes of LPG a month as demand grew by around 10% every year, driving the need for expanded storage capacity.

PTT invested 16 billion baht in a new storage facility in Chonburi, which will help increase storage capacity to 250,000 tonnes, from 130,000 tonnes.

With a surplus likely on the horizon, PTT is currently in talks with the country's policymakers to revoke the ban on LPG exports imposed several year ago.

"We are ready to open our LPG facility service provider to other LPG traders or re-exporters," said Mr Auttapol.

PTT shares closed Friday on the SET at 242 baht, up four baht, in heavy trade worth 1.44 billion baht.

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