Thailand's PTT aims to quadruple LNG imports

Thailand's PTT aims to quadruple LNG imports

PTT plans to massively expand its LNG import capacity and ramp up overseas
development again, CEO Tevin Vongvanich told The Nikkei on Tuesday, as the
state-run Thai oil company seeks alternatives to dwindling domestic
resources.

PTT plans to more than double the capacity of its only liquefied natural gas
terminal, located in Rayong Province, from 5 million tons to 11.5 million
tons. It also intends to build a second terminal nearby that can handle 7.5
million tons a year, bringing the total to 19 million tons, nearly four
times PTT's current capacity.

The project has been approved by the government, and an environmental
assessment is underway. "We aim to break ground in three years and bring it
online in 2023," Tevin said.

PTT recently signed a 15-year contract to buy 1.2 million tons of LNG
annually from Malaysia's Petronas, alongside existing agreements with
Qatargas, Royal Dutch Shell and BP. It is looking for long-term suppliers in
Australia, North America and Africa as well. The company also plans to step
up spot procurement, which accounts for a third of its imports. Tevin aims
to use all 19 million tons of PTT's planned capacity in 2030.

The state-run enterprise is the sole LNG importer in Thailand, Southeast
Asia's largest buyer of the fuel. The country boosted LNG imports by 50%
last year to 3 million tons to substitute for domestic production -- its
proven natural gas reserves are on course to run out in seven years at
current output levels. Tevin's 2030 target of 19 million tons is a quarter
of what Japan, the world's top LNG buyer, currently imports annually.

In addition to supply contracts, PTT is eyeing production of its own outside
Thailand. Subsidiary PTT Exploration and Production holds an 8.5% interest
in the Rovuma Offshore Area 1 project in Mozambique. The block is among the
world's richest gas fields, with annual output projected at 12 million tons.
Based on these numbers, PTT would be entitled to about 1 million tons a year
-- a substantial contribution to Thailand's energy supply.

PTT gained its stake through the 2012 acquisition of British oil company
Cove Energy, for which it beat out Shell with a bid of roughly 1.2 billion
pounds ($1.5 billion at current rates). Other participants in the project
include U.S.-based Anadarko and Japanese trading house Mitsui & Co. A final
investment decision could come this year, and production is expected to
begin as early as 2021.

"LNG is a buyer's market right now," Tevin said, referring to the decline in
resource prices, "but we'll make every effort to make [the project] happen
along with the other operators."

PTT is eyeing a return to aggressive investment in development and other
upstream operations after having cut back in light of such factors as the
slump in crude oil prices. It confirmed natural gas and oil resources in an
Algerian block in which China's CNOOC holds an interest. PTT is also
expected to resume development in Canada that had previously been postponed,
and it has expressed interest in exploration in neighboring countries with
abundant reserves, such as Vietnam, Malaysia and Myanmar.

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Link to Original Article:
http://asia.nikkei.com/Business/AC/Thailand-s-PTT-aims-to-quadruple-LNG-impo
rts

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com