Thailand: PTT lifts 5-year capex by 78%

Thailand: PTT lifts 5-year capex by 78%

PTT Plc, the national oil and gas conglomerate, has revised up its five-year
capital spending plan for the entire group by 78% to 1.6 trillion baht as
global oil prices rise.

"It is time for our subsidiaries to start investing again in light of the
rising trend in oil prices," said president and chief executive Tevin
Vongvanich. "They [the subsidiaries] haven't had investment for quite a
while."

The newly announced figure is well above the 900 billion baht in capital
expenditure (capex) for 2017-21 announced last February, when PTT said
global oil prices would likely remain below US$35 a barrel. In recent years,
the group has focused on cost-cutting as a priority.

During the past year, however, global oil prices have risen quickly after
member countries of Opec moved to cut production to ease a supply glut.

The US benchmark, West Texas Intermediate crude for March delivery, has
risen to nearly $55 a barrel, while Brent crude for April settlement moved
in a range of $55-$58 a barrel last week on the ICE Futures Europe exchange.

PTT now expects global oil prices to move in a range of $50-$55 a barrel
this year.

Mr Tevin said most of the increase in capex will be set aside for
development of PTT's gas facilities, including liquefied natural gas (LNG)
receiving terminals and a fifth onshore gas pipeline.

Moreover, PTT subsidiaries will begin investing in major projects for the
first time in at least five years, he said. Capex for PTT itself will be
maintained at 300 billion baht.

The increased capex excludes new projects by subsidiaries IRPC Plc and GPSC
Plc, which will announce their own capex for new investments in the second
quarter.

PTT's capex rise includes projects of other subsidiaries, including PTT
Global Chemical Plc's retrofit project in Map Ta Phut. That job aims to
increase production capacity at the naphtha cracker to produce 500,000
tonnes a year of ethylene and 261,000 tonnes of propylene.

The project, worth $4.5 billion, is expected to start construction in 2018,
with commercial operations to commence in 2020.

PTT plans to allocate about 150 billion baht for its gas facilities,
including the fifth onshore gas pipeline to link existing pipelines in the
western region to the East. That project is expected to started operations
during 2020-22.

For the LNG business, PTT has set aside nearly 40 billion baht for an
expansion of the LNG receiving terminal in Map Ta Phut to raise capacity to
11.5 million tonnes a year, up from 10 million, as well as development of a
second unit of the LNG receiving terminal in Nong Fab with a capacity of 7.5
million tonnes a year.

The gas plan aims to increase storage capacity of the country's LNG
receiving terminals to 19 million tonnes by 2022, up from the current 5.2
million.

Another big tranche is earmarked for PTT subsidiary Thai Oil Plc, the
country's biggest oil refiner.

Thai Oil will spend $5 billion baht on its Clean Fuel Product initiative,
which aims to increase refining capacity from 275,000 barrels a day to
400,000 and enhance efficiency at company facilities.

PTT is also conducting a feasibility study of a plan to develop a floating
storage regasification unit (FSRU) with a capacity of 3 million tonnes a
year.

PTT shares closed last Friday on the Stock Exchange of Thailand at 396 baht,
up two baht, in heavy trade worth 5.58 billion baht.

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Link to Original Article:
http://www.bangkokpost.com/business/finance/1198125/ptt-lifts-5-year-capex-b
y-78-

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com