PTT prepares to go global with LNG
Diversification to help oil company cut risks
National oil and gas conglomerate PTT Plc is readying its staff to deal with diversifying its business into the global trade of liquefied natural gas (LNG), says chief operating officer Wirat Uanarumit.
He said PTT is also conducting a feasibility study to invest about US$300 million (10.5 billion baht) to develop a facility where ethane will be extracted from LNG.
PTT plans to invest more in its LNG business because it will have to import up to 20 million tonnes of LNG annually by 2036.
"PTT has already entered the LNG trade," Mr Wirat said. "In the long term it could become a major LNG importer, so integration of this business is crucial in order to cut risks."
This year, PTT is expected to import nearly 5 million tonnes, a marked rise from 2.9 million last year.
"The business may start in a similar fashion to when we initiated our oil trading business, which began with imports and exports before expanding into out-out trading," Mr Wirat said.
He said PTT plans to integrate its LNG business after being the sole importer of LNG. It has operated an LNG receiving terminal in Map Ta Phut, Rayong since 2011.
PTT is expanding the storage capacity of the receiving terminal in Rayong from 5 million tonnes a year to 10 million. The additional capacity is due to be available by mid-2017.
A subsidiary, PTT Exploration and Production Plc, also holds an 8.5% share in Mozambique's Rovuma A1 gas block to develop a liquefaction facility close to the source. The final investment decision by the consortium is due by year-end.
PTT is also expanding capacity for its first LNG terminal to 11.5 million tonnes a year, with the additional capacity available by 2019, as scheduled by the Energy Policy and Planning Office (Eppo).
PTT is further increasing its regasification and storage capacity for the second unit of its LNG terminal in Map Ta Phut from 5 million to 6.5 million tonnes a year, as dictated by the energy policymaker.
Eppo has also ordered PTT to develop a new regasification unit in Rayong's Nong Fab district with a capacity of 7.5 million tonnes, due to start operations in 2023.
Mr Wirat said plans to expand the regasification and storage capacity have been prepared in the event of delays by the central government on whether to open a new round of bidding for concessions of the Bongkot and Erawan gas blocks, which expire in 2022 and 2023, respectively. The final decision is due to be made this year.
The Bongkot block is operated by PTTEP, while the Erawan block is operated by Chevron Offshore Thailand.
But PTT has factored in the possible delay of the Bongkot and Erawan concessions, expecting that such a scenario would cut the country's gas supply by more than half to 500 million standard cubic feet of gas per day, compared with 2,000 MMSCFD currently.
To deal with a sharp fall in gas supply, PTT is conducting a feasibility study on an ethane extraction plant and related facilities with an estimated investment budget of $300 million. The project is expected to produce 500,000 tonnes of LNG a year. PTT is likely to make a final investment decision on that project by next year.
Another plan to deal with a possible drop in gas supply is to seek a long-term gas purchasing contract for 5-10 million tonnes a year.
PTT has already secured long-term purchase contracts with major gas suppliers. It has a 2-million-tonne contract with Qatar Gas, a 1-million-tonne contract with Shell and a 1-million-tonne agreement with BP. PTT also plans to import another 1.2 million tonnes from Malaysia's Petronas.
PTT Global Chemical Plc, the petrochemical business arm, also plans to import more LNG and turn its byproduct, naphtha, into feed stock under a retrofit programme.
PTT shares closed yesterday on the Stock Exchange of Thailand at 394 baht, down 14 baht, in heavy trade worth 5.14 billion baht.