PTT looking overseas to trade LNG
Firm optimistic about expansion in Asia
PTT Plc, the national oil and gas conglomerate, is upbeat on its big step to enter many Asian countries, especially China, after spotting potential in many kinds of energy businesses and petrol retail segments.
Tevin Vongvanich, president and chief executive, said the company is poised to trade liquefied natural gas (LNG) to satisfy rising import demand in China, Vietnam, Cambodia and Myanmar as demand has dwindled in Japan, South Korea, Taiwan and Thailand in the past decade.
"PTT will use its LNG receiving terminal in Rayong's Map Ta Phut and Nong Fab as the base for its LNG trading business as it still has half of maximum capacity left to support its business plan," he said.
The Map Ta Phut site has a capacity of 11.5 million tonnes a year and its first 5 million tonnes of capacity have been in operation since 2011. The remaining 6.5 million tonnes are under construction, scheduled to come online next year.
The third receiving unit with a further 7.5 million tonnes at Nong Fab is undergoing a concept design. Construction has been set for 2020 and operations are scheduled for 2023.
The combined three units will have a total LNG capacity of 19 million tonnes by 2023.
PTT is studying the feasibility of increasing capacity to 26.5 million tonnes, but Mr Tevin said a plan has yet to be concluded upon for development.
These two facilities are designed to offset gas depletion from the Gulf of Thailand and Myanmar over the next decade.
PTT entered the LNG business since 2008 when it developed the receiving terminal, starting operation in 2011. It currently has a monopoly on the LNG trade in Thailand.
Moreover, it has entered the LNG production business through an off-shore resource in Mozambique via its subsidiary PTT Exploration and Production Plc.
Meanwhile, high-emission petrol in the transport sector is being threatened by disruptive technology in the form of new-generation vehicles like electric cars.
Last week, PTT also announced a budget for renewable energy in a range of 3-6% of its total capital spending of 342 billion baht during 2018-2022, and another 245 billion for provisional capital spending.
Most capital spending is going into development and expansion of its production facility from upstream to downstream business, while renewable funding will be targeted at energy storage efforts to serve electric cars.
"Many leading economies are cutting fossil fuel usage by replacing it with renewables and electric cars, so PTT cannot miss this future trend," said Mr Tevin.
Oil and gas firms are looking for new energy resources and providing capital spending to keep existing businesses at higher growth rates.
While ExxonMobil is emphasising existing businesses, it is also developing technology to decrease production costs and increase efficiency.
The EU plans to cut greenhouse gas emissions by 80% by 2050, while Japan wants to cut such emissions by 26% within 2030. China has put off the development of 85 coal-fired power plants, shifting to develop renewable plants instead.
Buranin Rattanasombat, PTT's executive vice-president, said PTT is preparing for a boom in electric cars in the country by allocating 30 million baht for the expansion of charging stations at up to 21 sites, scheduled for commercial service from this year.
PTT will offer both normal and quick-charging outlets, and will hold a licence for electric car charging stations from the Energy Regulatory Commission.
"Although many types of electric cars have higher retail prices than combustion engine cars, PTT believes the auto technology will be developed fast to reduce costs," he said.
"Several car care products will no longer be necessary once electric cars take off, so it will soon impact different segments of the petrol retail segment."
Mr Buranin, who is in charge of the lubricants business, said PTT is preparing to set up a subsidiary called PTTOR China around July or August to operate lubricant distribution in China.
He said China has a huge demand for lubricants, roughly 8-10 billions litre per year, making it the world's largest market, while Thailand's demand is 800 million litres per year.
"PTT sells 3-5 million litres of lubricants in China per year and it wants to increase its sales to 10 million in 2019 and 50 million over the next five years," he said.
"PTTOR China will be a subsidiary of PTT Oil and Retail, for which PTT will complete asset transfers around the third quarter of 2018."
Mr Buranin said PTT is seeking further opportunities to make mergers and acquisitions as well as joint ventures to manufacture lubricants, and is planning to bring the Cafe Amazon, its coffee chain, to China.