Most people in the retail oil industry think the business has matured over many years, but Pitak Ratchakitprakarn, chief executive of PTG Energy Plc (PTG), the operator of PT petrol stations, thinks otherwise.
PTG plans to build 100 new PT petrol stations a year as it expands.
The withdrawal of international oil retailers such as Conoco, Petronas and Kuwait Oil from the Thai market is also another sign that this business is no longer as attractive as it used to be.
While other oil companies may have scaled down or even shelved their investment budgets, PTG is planning to expand its petrol station network nationwide.
Mr Pitak said the petrol market in Bangkok and its vicinity has matured but the situation is different in large cities in central and northeastern provinces.
Land prices in Bangkok are getting expensive, mainly because of the property boom, causing retail oil investment to take a long time to break even, said Mr Pitak.
Major oil traders and foreign oil retailers are always looking for potential locations in Bangkok as well as those on main roads and along highways outside the capital. They somehow have played down the fact that some large cities in the Central region and Northeast still hold high potential.
According to Mr Pitak, there are currently 20,000 petrol stations, of which 15,000 are operated independently by private landlords or investors.
Some of these service stations are operated by the old generation who are close to retirement and may possibly close down the business soon, he said.
He added that petrol stations on local roads also have high business potential. "We want to work with those independent operators by offering them good returns," said Mr Pitak.
At present, there are only 30 PT petrol stations in Bangkok where the retail oil market is experiencing a glut.
Countrywide, the company's service stations have expanded from 360 units in 2010 to 570 units at present with the aim to succeed the Thai unit of Royal Dutch Shell as the third largest retail oil operator in Thailand after PTT and Bangchak Petroleum Plc.
Last year, PTG also improved its non-oil services and introduced a new concept of very large petrol stations with the first one located in Ayutthaya. By the end of next year, the company targets to have 700 petrol stations in operation, mostly in the central region and the Northeast.
One factor that has enabled PTG to maintain cost competitiveness is its logistic operations including fuel tank farms and oil trucks. Trucks are now able to carry 45,000 litres of petrol each, up 50% from 30,000 litres previously to trim down transportation cost.
Good management of seven fuel tank farms located in different parts of the country is another cost-control.
Mr Pitak said PTG's new strategic oil stations will also target trucks and other large vehicles that consume a large amount of petrol in addition to passenger cars and pickups.
Formerly known as Paktai Chueplerng Co, the company was established in 1988 after Thailand liberalised the retail oil business. The company became heavily in debt following the 1997 Asian economic crisis with total liabilities rising to 3.6 billion baht over a year.
It went through debt haircuts and restructuring several years ago. In the first half of this year, the company eliminated a 200-million-baht accumulated loss with a plan to seek listing on the Thai stock exchange early next year.
The company submitted a filing with the Securities and Exchange Commission on Wednesday to float its shares on the Thai bourse, seeking to raise funds to open 100 petrol stations annually over the next five years.
The operator of PT stations aims to sell 420 million shares in an initial public offering (IPO) this year, representing 25.15% of its existing registered capital, at a par price of one baht a share.
PTG's current registered capital is 1.67 billion baht, of which 1.25 billion is paid up. After the IPO, paid-up capital will increase to 1.67 billion baht, said chief executive Pitak Ratchakitprakarn.
Of the total IPO shares, 386.6 million will be offered to the public with the remaining 33.4 million made available to directors, executives and employees.
Sage Capital is the financial adviser and Nomura Securities the underwriter.
About the author
- Writer: Yuthana Praiwan
Position: Business Reporter