PTTGC ups overseas capex
Firm shifting away from domestic oil
State-owned PTT Global Chemical Plc (PTTGC) aims to boost its overseas investment portfolio to above 50% of total capital expenditure by 2030, up from 30%, to reduce its reliance on domestic oil supply and invest in lucrative foreign markets.
The company expects to increase the share of overseas revenue from 50% to 60% after 2030.
While not finalised, overseas investment is expected to range between 150 billion and 200 billion baht, excluding loans, said newly promoted president and chief executive Kongkrapan Intarajang.
PTTGC has long focused on the domestic market, but it started investing in the US and EU markets over the past six years.
Mr Kongkrapan said the company has set a new direction for the next decade, and PTTGC will have a second home in the US and other potential overseas petrochemical markets.
He said the US is an interesting market for investment because of its large volume and high value.
The US has abundant shale gas resources that could be separated into fundamental raw materials for petrochemicals for a reasonable price.
"We have seen this potential grow higher, so we decided to take this new direction," Mr Kongkrapan said.
The company plans new investments, takeovers and asset acquisitions in the US.
Mr Kongkrapan said PTTGC has high potential to finance capacity. If it finds the right deals, the new investments will not affect cash on hand, he said.
PTTGC's cash on hand ranges from 150 billion to 200 billion baht, enough for larger deals, Mr Kongkrapan said.
The company's projects on hand in the US include a joint venture called Nature Works LLC, a 50:50 investment with US-based Cargill.
Nature Works specialises in polylactic acid and biodegradable plastics from agricultural products.
Nature Works made plans in 2012 to build a second facility in the US, but it has not decided on a location yet.
For its second project in the US, PTTGC partnered with South Korea-based Daelim Industrial last year and formed PTTGC America in order to conduct a feasibility study for a petrochemical ethane cracker complex in Ohio.
Although a final investment decision on the project has not been made, PTTGC America has invested more than US$100 million in the project in preparation for the proposed plan.
The collaboration with Daelim includes plans for a larger plant, more jobs and more investment than what was originally anticipated when PTTGC America first announced the results of the feasibility study in 2015. Production is now estimated at 1.5 million metric tonnes per year, 500,000 more than was previously expected.
PTTGC is also investing in France with Vencorex, formerly Perstorp Holding France SAS, which began in 2011 and runs a foam maker used in the oil industry.
The company is also looking at bio-based plastics as another area of investment, Mr Kongkrapan said.