Pushing PTT beyond disruption
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Pushing PTT beyond disruption

The state energy firm's boss discusses innovation and smart cities

Chansin Treenuchagron, PTT president and chief executive
Chansin Treenuchagron, PTT president and chief executive

Although oil and gas remain PTT's core competencies, the national energy firm is trying to revamp its business and diversify into renewable energy.

Technology disruption is invading the fossil-based energy world, and renewable sources are showing strong potential as alternative fuels for power generation.

At 1.4 trillion baht, PTT is the largest company by market capitalisation on the Stock Exchange of Thailand.

Chansin Treenuchagron, president and chief executive, discussed disruption issues with the Thai media during site visits to Aspern Smart City in Austria and Grenoble in France.

He said PTT plans to apply smart city principles in the Eastern Economic Corridor of Innovation (EECI), a site in Wang Chan Valley owned by PTT.

How will renewable energy disrupt PTT's business and how will PTT deal with it?

Renewable resources are becoming mainstream energy, while fossil-based fuels are being improved to be higher-priced products, not mass fuels. PTT has a plan to add more value to low-margin bunker oil to be marine and premium diesel fuel and commodity-grade petrochemical polymer to be specialty and engineering plastics. PTT is committed to expanding the non-oil segment, such as the Cafe Amazon network, across Asia. As a result, PTT's oil and gas business will be scaled down in terms of operating costs and added to digitalised operations.

PTT is planning to expand businesses both horizontally and vertically.

PTT has seen the domestic market become nearly saturated as cleaner fuels approach rapidly, so PTT is expanding every business segment across Asia.

PTT has six core business units, covering oil and gas, petrochemicals and power generation, which will be PTT's core competencies in the future.

Some fossil-based resources are expected to be depleted, such as gas in the Gulf of Thailand, so PTT plans to shift away from gas-based petrochemicals to crude oil under the Map Ta Phut Retrofit project, which has begun construction. The project will operate in 2022.

What new businesses does PTT plan to go into?

PTT is always seeking other energy-related businesses based on our capabilities in the biochemical field. PTT has operated in biofuels for more than a decade.

PTT is expanding its expertise in areas such as production facility and infrastructure development into the smart city and pharmaceutical fields, which need the cooling system used to process liquefied natural gas waste.

The waste can be used to produce high-value food and hygienic products.

For the cooling system, PTT has trialled tulip planting with cool wastewater for many years and could potentially use PTT's Rayong facilities to grow tulips on a mass scale.

How far has PTT proceeded in new business expansion?

Many plans are being discussed and feasibility studies are being conducted. Some are awaiting final decisions from PTT's business partners.

For the long-term outlook, PTT is developing the EECI to be an innovation and research town and to house a new subsidiary, Robotics Ventures Co (ARV), which specialises in tailor-made robotics and artificial intelligence (AI).

The EECI will be a community of scientists and researchers. The project is located at Wang Chan Valley in Rayong, adjacent to Kamnoetvidya Science Academy and Vidyasirimedhi Institute -- PTT's educational institutions.

The EECI will soon become R&D infrastructure. Construction for the first-phase facility broke ground in February.

This project is expected to be a turning point for the PTT group of companies because PTT will transition to the innovative-based business, together with ARV, another express method for new development of robotics and AI for PTT.

ARV is set to be a corporate venture capital firm to search for startups. The company has so far teamed up with two startups, one a robotics provider and the other a digital platform for property big data.

How will PTT prepare human resources for the transition period?

PTT recently reshuffled 64 high-ranking executives to capture this new trend. PTT gave the executives a grace period of six months to prepare before the effective date.

Two weeks ago, PTT revised its business direction and increased its investment budget for the next five years. The 2019 budget was revised on June 20 from 70.5 billion baht in the previous plan to 103.7 billion baht.

PTT has quintupled its five-year investment budget for technology, innovation and engineering to 34.44 billion baht from 6.74 billion baht in the previous plan.

Some downstream and administration spending is being trimmed down.

Hundreds of research jobs have yet to be applicable for commercial purposes because there is little avenue for researchers' aspirations to be realised and to bring laboratory successes to supermarket shelves.

PTT wants to fill the gaps between researchers and marketing men.

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