Thailand: CNG to snap string of losses

Thailand: CNG to snap string of losses

After suffering losses incurred through selling compressed natural gas for
more than a decade, state energy firm PTT Plc says it expects the CNG
business to make money for the first time this year.

The shrinking losses are a result of cuts in operating and transport costs
put in place over many years, said Wirat Uanarumit, chief operating officer
for upstream business.

As the country's sole CNG retailer, PTT was forced by the government to
supply public buses in Bangkok for more than 20 years at lower-than-market
prices.

During the time that global oil prices surged above US$100 a barrel, CNG
became more popular among motorists as they switched from petrol to CNG,
widening losses further.

The company suffered more than 20 billion baht in losses until CNG prices
were floated in mid-2014, when the government started to free up prices
gradually, leaving a small subsidy to the CNG business.

The number of vehicles compatible with CNG jumped 4000% from 10,000 units in
2007 to 410,000 units in 2013.

After CNG floating prices were floated for a few years, losses from CNG
dropped to 10 billion baht in 2015 and dropped further to 5 billion baht in
2016.

PTT has cut the number of CNG refill stations from close to 500 stations to
436 now.

Demand for CNG fell more than 10% from 9,800 tonnes a day in 2013 to 7,800
tonnes a day by the end of last year.

Mr Wirat said imports of liquefied natural gas (LNG) will rise to an
estimated 5 million tonnes this year from 2.9 million tonnes in 2016.

Major gas resources will be domestic gas at 75%, with 17% from PTT's Myanmar
plant and the remaining 8% will be imported.

Around 60% of total LNG will be supplied to the power generating sector,
while 20% will be supplied to PTT's gas separation plants and the remaining
15% for its business sector.

Mr Wirat said PTT has a gas purchase contract with Qatar Gas for 2 million
tonnes and with Royal Dutch Shell for another 2 million tonnes.

PTT is also awaiting approval to sign a gas purchase agreement with
Malaysia's national oil and gas conglomerate, Petronas, for 1.2 million
tonnes of the gas.

Elsewhere, PTT is waiting for a final investment decision on Mozambique's
Rovuma Area 1 for a liquefaction project, in which subsidiary PTT
Exploration and Production Plc holds 8% equity.

PTT shares closed yesterday on the Stock Exchange of Thailand at 416 baht,
up six baht, in trade worth 2.56 billion baht.

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Link to Original Article:
http://www.bangkokpost.com/business/news/1194201/cng-to-snap-string-of-losse
s

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com