Thailand: PTT proceeds with gas spin-off

Thailand: PTT proceeds with gas spin-off

PTT Plc, the national oil and gas conglomerate, says it is in the process of
separating its gas balance sheet from PTT to spin off the business.

President and chief executive Tevin Vongvanich said this is part of a plan
to compete in the gas industry after the government fully deregulates it by
allowing the retail price to move freely after being pegged for more than
three decades.

He said gas demand is growing substantially and the company is also
importing more liquefied natural gas (LNG) to supply rising demand.

On July 31, the National Energy Policy Council obliged PTT to separate its
gas business from the parent firm to prepare for gas deregulation.

The Energy Regulatory Commission (ERC) has prepared since early this year to
open up for newcomers to enter the gas business. Major energy companies such
as the Electricity Generating Authority of Thailand (Egat) and Gulf Power
Group have already registered themselves with the ERC to start their gas
business.

Mr Tevin said it may take several more years for the country to completely
deregulate the gas business.

However, he said PTT is now ready for the competition of gas business
because it has strong expertise, the right human resources and
cost-efficient operations.

Wirat Uanarumit, PTT's chief operating officer for the upstream petroleum
and gas business group, said new players in the gas business will have no
impact on competitive advantage, since the company has the strong advantage
of having a full-stream energy business, ranging from upstream to midstream
and downstream.

For upstream business, PTT has LNG supply from subsidiary PTT Exploration
and Production (PTTEP), which has LNG supply from projects in Mozambique and
Australia.

For midstream business, the company has set up a feasibility study to start
its gas liquefaction plant in Malaysia. It has already acquired a 10% stake
in Malaysia's national oil firm, Petroliam Nasional Berhad (Petronas).

Total gas demand in Thailand stands at 5 billion standard cubic feet per
day. Some 58% is for power generation, while the rest is for other
industries and the transport sector.

Domestic gas resources supply about 75% of total gas demand, while 20% is
imported from neighbouring Myanmar via pipelines and the remaining 5% is
imported from other regions.

But gas supply from domestic resources and Myanmar is expected to drop to
roughly 40% by 2020 as gas resources are depleted.

Mr Tevin said PTT is revising its capital expenditure (capex) for the new
business investment strategy over the next five years under sustainable
development goals. These include a plan to add value to existing assets,
boost cost efficiency and diversify business.

The revised capex is based on an estimation of the budget and will be
finalised by this December.

The plan aims to add new businesses such as bio-based petrochemicals and
fuel, energy storage and electric vehicles to the existing core businesses.

PTT is also joining with US-based partners to seek business relationships
with startups in the US market, mostly involving energy-related fields.

PTT yesterday posted a second-quarter net profit of 31.3 billion baht,
compared with 24.9 billion baht a year earlier.

Net profit for the first half of 2017 was 77.5 billion baht, up 60%
year-on-year, due to rising prices for oil and petrochemical products.

PTT shares closed yesterday on the Stock Exchange of Thailand at 385 baht,
up one baht, in trade worth 855.6 million baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1308187/ptt-proceeds-with-gas-spin-
off

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com