Thailand: Petronas LNG supply in reach

Thailand: Petronas LNG supply in reach

PTT Exploration and Production Plc (PTTEP) is to secure the supply of
liquefied natural gas (LNG) by purchasing a 10% stake in an LNG production
resource of Malaysia's national oil firm, Petroliam Nasional Berhad
(Petronas), for US$500 million (16.7 billion baht).

PTTEP will acquire the stake through PTTGL Investment Co (PTTGLI). A share
sale and purchase agreement was signed yesterday in Malaysia.

PTTGLI is wholly owned by PTT Global LNG, which is owned 50:50 by PTTEP and
its parent firm, PTT Plc.

President and chief executive Somporn Vongvuthipornchai said the 10% stake
in the Petronas asset covers Petronas LNG 9 Sdn Bhd (PL9SB), located in
Bintulu, Sarawak.

PTTEP and PTT will pay $250 million each for the deal, with the transaction
to be completed by September.

After asset acquisition, other shareholders of this LNG production facility
will be shaken off, with Petronas remaining a major shareholder with 80%,
PTTEP worth 10% and JXTG Nippon Oil and Energy Corporation holding the
remaining 10% through Nippon Oil Finance Netherlands BV.

PL9SB operates an LNG liquefaction facility at Train 9 in the Petronas
complex with annual production of 3.6 million tonnes, which commenced
production in January this year.

Mr Somporn said the deal could secure additional LNG supply for the Thai gas
market, which is imported solely by PTT to supply rising demand,
particularly in the power generating sector. PTT has already secured 5.2
million tonnes of LNG in advance by committing to purchasing contracts with
Qatar Gas, Shell, British Gas and Petronas.

The latest 10% stake being acquired from PL9SB will add to the 5.2 million
tonnes of gas.

"The LNG liquefaction plant purchase deal is aimed at integrating PTT
group's LNG gas business, which still lacks a midstream LNG supply chain,"
Mr Somporn said.

PTT group operates upstream LNG supply through PTTEP, while its downstream
business operates independently at Rayong's Map Ta Phut LNG receiving
terminal.

PTT's LNG receiving terminal has a storage capacity of 10 million tonnes a
year and the company is planning to increase capacity to almost 20 tonnes
within 4-5 years.

PTTEP has E&P petroleum resources in more than 10 countries worldwide.
Mozambique's offshore Rovuma Area 1 and Australia's Cash and Maple have the
most potential for LNG production. The company is still conducting
feasibility studies on the projects, which are expected to be complete by
the end of the year, when the company executives will decide whether to
continue exploration.

Mr Somporn said capital expenditures for the deal will be funded from PTT
Regional Treasury Center Pte and PTTEP Treasury Center Co.

PTTEP shares closed on the SET yesterday at 87.75 baht, up 50 satang, in
trade worth 683 million baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1295351/petronas-lng-supply-in-reac
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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com