Thailand: PTTEP plans for output to meet demand

Thailand: PTTEP plans for output to meet demand

PTT Exploration and Production (PTTEP), the only SET-listed upstream
petroleum company, aims to produce at least 300,000 barrels of oil
equivalent per day (boed) of petroleum to maintain its earnings and meet
strong demand, says president and chief executive Somporn Vongvuthipornchai.

This level is around 6% below the output of 320,000 boed in 2016 as the
company plans to rev up production at certain petroleum resources to offset
declining output at ageing resources that require upgrades.

Mr Somporn said the company's plan to raise production will be applied to
all projects both domestic and overseas to secure petroleum supply to meet
rising demand.

In Myanmar, PTTEP plans to increase production from offshore gas blocks at
Zawtika and Yetakun. However, the exact rise in volume has not been decided.

"The plan to raise gas production at our blocks in Myanmar is in line with
rising demand in the country, where the economy is growing quite fast," he
said. Petroleum sales in Myanmar and Thailand account for around 90% of the
company's total sales each year.

For Thailand, PTTEP will continue to beef up petroleum production at its
Bongkot gas block in the Gulf of Thailand, although it is nearing the end of
its concession. Exploration firms typically wind down production before
concession expiry as it is uncertain whether the concession will be renewed.

Average output at Bongkot is 900 million standard cubic feet per day
(MMSCFD), which the company aims to maintain this year and next. However, it
wants to increase the proportion of gas production to capitalise on rising
gas prices and strong demand. The gas will be sold to the country's sole
natural gas vendor, PTT Plc.

The Mineral Fuels Department is in talks with Chevron about gas production
from the Erawan block, which is operated by Chevron, as the agency wants it
to maintain its output at 1,100 MMSCFD. Veerasak Pungrasami,
director-general of the department, said the negotiations are ongoing.

Mr Somporn said PTTEP plans to negotiate with related state agencies that
own the land used for PTTEP's Sirikit oilfield, also known as S1, about
expanding production activity at the blocks, which currently produce 27,000
barrels of oil per day.

He said there is some Sor Por Kor agricultural land near S1 that has strong
potential to have oil and gas deposits that could be dug up in the future.

Production from S1 has been increasing gradually since PTTEP acquired the
production and exploration assets from Thai Shell Exploration and Production
in 2004. Output stood at only 17,600 barrels per day 13 years ago.

Mr Veerasak said higher global gas prices could mean the price it sells to
its parent PTT would rise by US$1-2 per million British thermal units.

The concessions for the Bongkot and Erawan gas blocks are due to expire
soon, and the terms of reference for the new bidding round for the two gas
blocks are due between next month and early next year, he said.

Dozens of exploration and production firms have expressed interest in
joining the bidding, said Mr Veerasak.

Energy Minister Anantaporn Kanjanarat said the Foreign Affairs Ministry is
expected to step in to help deal with the lawsuit against PTTEP by the
Indonesian government based on its oil spill in 2009.

Gen Anantaporn said the ministry and the Thai government are concerned the
case could affect the confidence of foreign investors considering Indonesia.

"We are working with the Foreign Affairs Ministry to set up talks with the
Indonesian government because we are concerned the issue could adversely
affect the operations of PTTEP AA. We are afraid it would hurt foreign
investors' confidence if the Indonesians seize foreign assets without a
court order," he said.

The Indonesian government is suing PTT, its petroleum explorer PTTEP and
PTTEP Australasia (PTTEP AA) for environmental damage in the Timor Sea from
the leakage of hundreds of thousands of litres of oil off the northern coast
of Western Australia in 2009 from the Montara wellhead operated by PTTEP AA.

Indonesia's lawsuit was filed earlier this month at the Central Jakarta
District Court. None of PTTEP AA's assets have been seized, as the
Indonesian government announced it planned to do.

PTTEP shares closed yesterday on the SET at 94.25 baht, down 1.25 baht, in
trade worth 553 million baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1252266/pttep-plans-for-output-to-m
eet-demand

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com