PTTEP to start Mozambique LNG project by end of year

PTTEP to start Mozambique LNG project by end of year

The first phase of PTTEP’s LNG project in Mozambique’s Rovuma Offshore Area 1 is expected to be completed within 2021.
The first phase of PTTEP’s LNG project in Mozambique’s Rovuma Offshore Area 1 is expected to be completed within 2021.

PTT Exploration and Production Plc (PTTEP) expects to start the development of a liquefied natural gas (LNG) project in Mozambique's Rovuma Offshore Area 1 by the end of this year, says the company's president and chief executive Somporn Vongvuthipornchai.

According to the schedule, the first phase is expected to be completed within 2021 with an annual output of 12 million tonnes, he said.

Of the total, 2.6 million tonnes will be delivered to Thailand through its parent company PTT Plc, the country's national oil and gas conglomerate.

PTTEP acquired an 8.5% share in the project from Britain-based Cove Energy in May 2012 for US$1.92 billion. US-based Anadarko Petroleum is the operator of the project.

The operator is now preparing gas sales agreements and project finance. Bidding for engineering, procurement and construction will soon be opened.

Mr Somporn said this project will be a major LNG resource for Thailand in the future because the country would have to import as much as 22 million tonnes of LNG a year, up from the current 4 million tonnes a year.

Although global oil prices remain low, Mr Somporn said he is confident the production cost of LNG from the Rovuma A1 project would remain competitive.

For 2016, he said PTTEP planned to trim production costs by 10% from $3.43 billion, including operating and capital expenditures.

It planned to cut production unit cost to $34.22 per barrel from an average of $39 a barrel the previous year.

Last year, the company cut its operating costs by 20% and reduced capital expenditure by 30%. It also trimmed its production unit cost to $39 per barrel from $43.50 a barrel in 2014.

Cash cost will also be trimmed this year to $14.50 from $16 in 2015 and $21 in 2014, he said.

"We have to monitor global oil prices and keep down our production costs to stay at a competitive level," said Mr Somporn.

This year, PTTEP targets petroleum sales at 322 kilo barrel of oil equivalent -- the same volume as last year.

In addition to cost competitiveness, the company's strategy will focus on Southeast Asia along with seeking strategic partnerships.

PTTEP is also conducting a feasibility study for investment in renewable energy.

Despite the collapse of global oil prices, PTTEP has allocated a budget for mergers and acquisitions (M&A). If it signs any M&A deals, it would have cash on hand of $3.2 billion.

PTTEP shares closed yesterday on the Stock Exchange of Thailand at 74.50 baht, up 1.25 baht, in trade worth 1.05 billion baht.

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