PTT budgets B450bn for 2019 expansion

PTT budgets B450bn for 2019 expansion

Group, 5 subsidiaries to splash on upgrades

The LNG receiving terminal in Rayong, one of the facilities to which PTT will allocate this year's combined expansion budget of 450 billion baht. (Photo by Apichart Jinakul)
The LNG receiving terminal in Rayong, one of the facilities to which PTT will allocate this year's combined expansion budget of 450 billion baht. (Photo by Apichart Jinakul)

PTT Plc, the national oil and gas conglomerate, together with five subsidiaries is allocating a 2019 budget for all business expansion worth a combined 450 billion baht.

Most of the budget will be spend on the government's Eastern Economic Corridor scheme in three provinces (Chachoengsao, Chon Buri and Rayong) where the group operates petrochemical and utility businesses.

President and chief executive Chansin Treenuchagron said PTT itself will spend 130 billion baht in 2019, including the fifth phase of an onshore gas pipeline, the second phase of a liquefied natural gas (LNG) receiving terminal and an oil retailer unit.

The receiving terminal is in Nong Fab, Rayong province and has a capacity of 11.5 million tonnes a year.

Mr Chansin said all PTT business plans are based on an estimate of crude oil prices averaging US$60 a barrel, down from $69 in 2018.

The oil and gas drilling firm, PTT Exploration and Production Plc (PTTEP), is assigned 60 billion baht, mainly for drilling in existing oil and gas blocks in Thailand, Myanmar, Malaysia and Australia.

PTTEP also has two new petroleum blocks in the United Arab Emirates.

Phongsthorn Thavisin, PTTEP's chief executive, said the firm plans to expand its oil and gas reserves from five to seven years, equal to the current proven reserve volume of 670 million barrels of oil equivalent.

"PTTEP is in a transformation period of the business concept, refocusing on Southeast Asia and the Middle East instead of covering all regions in the world," Mr Phongsthorn said. "It plans to add value to existing assets from upstream oil to power generation."

PTT's largest budget in 2019 is for the well-known takeover deal between its power business, Global Power Synergy Plc (GPSC), and Glow Energy Plc.

The takeover deal was previously worth 139 billion baht but was rejected by the Energy Regulatory Commission (ERC) at first.

The ERC finally approved a deal in late December in which Glow will sell its power plant in Rayong to a third party before the takeover can take place.

Chawalit Tippawanich, GPSC's president and chief executive, said the deal is expected to conclude in the first half of 2019 after Glow sells the SPP1 power plant in Map Ta Phut.

"The delay will not impact Glow's parent firm, Engie, which wants to shift its fossil-fired power generation to renewable resources," Mr Chawalit said.

Thai Oil Plc, a refiner under PTT, will start construction of the Clean Fuel Project (CFP) in Sri Racha, Chon Buri in 2019.

The CFP is designed to complement Thai Oil's existing oil refinery and utility units and is set for development during 2019-22 at a total cost of $4.73 billion.

Capacity for oil refining will increase by 45% to 400,000 barrels a day, up from 275,000 barrels a day at present.

The new crude oil output of CFP will come with a higher grade, and all types of refined oil will cost more because the new environmental standard of marine oil aims for a lower sulphur content of 0.5% in January 2020, down from 3.5% now.

A petrochemical business, PTT Global Chemical Plc, will invest 50 billion baht in 2019 for its ongoing project of performance upgrades and specialty petrochemical products such as propylene oxide and ethylene oxide.

Supattanapong Punmeechaow, PTTGC's president and chief executive, said the massive new investment in petrochemical production facilities will see significant results in 2020, as the biggest investment is set for 2019.

"PTTGC believes that the tension of the US-China trade war will ease up this year and demand for petrochemical and oil products will resume its high growth," Mr Supattanapong said.

IRPC Plc, another petrochemical maker, will spend 30 billion baht in 2019 for the Maximum Aromatics project, a naphtha-reforming and aromatics complex.

The complex will be built at the existing integrated petrochemical complex in Rayong province.

The complex will increase production capacity to 1.2 million tonnes of paraxylene (PX) a year, up from 1 million, and 495,000 tonnes of benzene, up from 114,000. PX is a component of polyesters, and benzene is a key additive of petrol.

PTT shares closed Friday on the Stock Exchange of Thailand at 49.50 baht, up one baht, in trade worth 2.24 billion baht.

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