Auttapol Rerkpiboon, president and chief executive of national oil and gas conglomerate PTT, admits that his tasks in the next five years will be challenging compared with the experiences of the nine predecessors who've been in his shoes since the company was established in 1978.
A former PTT vice-president overseeing the petroleum business, Mr Auttapol was appointed to the top job in May when lockdown measures were in place to prevent the spread of the coronavirus.
He assumed the role just after the firm suffered a huge loss of 1.5 billion baht in the first quarter because of a collapse in oil prices driven by travel restrictions that sharply cut fuel demand. Jet fuel consumption fell by up to 90% at that time.
The situation caused PTT to devise a high-risk factor management approach consisting of four measures, better known as the 4 R's: resilient, restart, reimagine and reform.
"This crisis is the most severe in several decades," Mr Auttapol said. "People across the world were affected and we don't know when it will stop."
Short-term survival
PTT set up a war room, called the "Vital Center", to deal with the crisis in the short and long terms.
The centre is working on the first R -- resilient -- to keep business operations going by cutting capital expenditure this year by 10-15% in response to falling revenue. The budget for non-urgent uncommitted projects will be slashed to maintain cash on hand.
In the first quarter this year, PTT already reduced expenses by 3.6 billion baht.
Issuance of debentures is also needed to preserve liquidity.
Oil refineries changed their production from jet fuel to diesel to avoid a huge surplus of oil during a ban on international commercial flights.
The second R -- restart -- is also necessary in the short term, as PTT must prepare to "restart" its businesses once the situation returns to normal. The company has to prepare for working with partners, including suppliers, traders and clients, when they resume their business.
"Since early July, demand for oil and non-oil products has almost come back to normal," Mr Auttapol said.
Long-term vision
The third and fourth R's -- reimagination and reform -- involve a need to analyse changes and trends in the industry in order to redesign businesses and translate new business blueprints into action through business restructuring.
Mr Auttapol said his perspective will see electricity and gas development projects among PTT's priorities.
The company is expanding its liquefied natural gas business and strengthening the LNG value chain as it seeks to become a key player in the regional LNG trade.
LNG prices in the spot market are low, making it a favourable fuel for power plants.
Mr Auttapol said PTT needs to balance between importing low-priced LNG during short-term trade and signing long-term contracts to buy the gas from oil companies. The latter are more expensive, but supply is guaranteed.
The company's power generation arm, Global Power Synergy (GPSC), will continue to expand capacity in facilities located overseas and will give weight to modern technologies like distributed power generation systems.
PTT is also planning to diversify business to life science, electric vehicles (EVs), and artificial intelligence and robotics.
"Several thousand of PTT's staff are engineers and scientists," Mr Auttapol said. "When we plan to go across the line to the [technology] businesses, this will be our strength because the staff possess basic scientific skills."
In 2018, PTT signed a memorandum of understanding with the Government Pharmaceutical Organisation (GPO) to complete a feasibility study of a production facility for cancer medicine and active pharmaceutical ingredients.
The drug plant is estimated to cost about 1 billion baht. In July, the GPO gave the green light to the project.
PTT has also invested through PTT Raise and ARV in AI and robotics development and is setting up a company, called Swap & Go, to test an EV business model and develop a mobile app for use with EVs.
Mr Auttapol said oil consumption may not be quickly disrupted by EV technology, as oil prices in the second half of 2020 are expected to remain low at US$40-45 a barrel because of the global economic recession.
EVs will merely share a market with conventional cars powered by internal combustion engines, not sweep them out in the way that first-generation mobile phones were "killed" by smartphones, Mr Auttapol said.
Outside of gas and high-tech products, PTT Oil and Retail Business will make the Amazon Cafe coffeehouses Thailand's brand ambassador.
The cafes have branched out rapidly in Thailand and abroad, with a total of 2,300 shops in various countries from Oman to Japan.