Thailand's PTT looks to LNG partnership deals to secure supply

Thailand's PTT looks to LNG partnership deals to secure supply

Thai state energy group PTT Pcl's July purchase of a stake in a liquefied
natural gas (LNG) plant operated by Malaysia's Petronas will be its model
for securing natural gas in the future, its chairman told Reuters.

Thailand plans to triple its LNG intake by 2022 as its domestic natural gas
output dwindles, and the strategy it is adopting is similar to Japanese
utilities such as Tokyo Gas and Osaka Gas taking small stakes in Australian
gas developments to lock up supplies.

"Investments will follow a similar model of starting with a long-term
purchasing agreement, and then jointly investing in a liquefaction plant,"
PTT Chairman Piyasvasti Amranand told Reuters in an interview in Bangkok.

"In the past, PTTEP would produce. Now we are investing more in 'midstream'
capacity," he said.

Thailand currently imports about 5 million tonnes of LNG per year, according
to Ministry of Energy data, with 70 percent of that used for power
generation. Last year, policy makers set a target for annual LNG imports at
17.4 million tonnes by 2022.

In keeping with that target, PTT is planning to increase its annual
regasification capacity to 21.5 million tonnes, from 10 million tonnes now,
Piyasvasti said, but he did not say by when.

"From 60 to 70 percent of LNG will come from purchasing agreements because
we do not want to rely entirely on the spot market," he said.

PTT Group, with nearly $15 billion in cash according to the latest financial
statements, is better placed for acquisition than many peers, such as
Petronas and Indonesia'sPertamina.

Piyasvasti said PTT was ready for further upstream investment to produce oil
and gas, but gave no details as to where, or if it had specific targets for
production or spending.

He also said PTT was being more cautious after some overseas projects showed
no profit or had high impairment costs.

He pointed to a palm oil operation in Indonesia from which the company
pulled out in 2015, partly because it was in an unfamiliar industry sector.
The success of an investment in Canada'sMariana Oil Sands Project is also in
danger because of low oil prices, he said.

"Now we are more careful when investing in new projects," he said.

The group's biggest overseas investment is offshore Mozambique in
southeastern Africa, where PTTEP holds an 8.5 percent stake in a project
operated by U.S. independent Anadarko Petroleum. Piyasvasti would not say
whether PTT was looking to build its holding there.

PTT was also interested in renewable energy in Thailand, the growth of solar
power and wind farms in particular, but PTT had made no significant
investments to date, he said.

"PTT has a clear investment policy for renewable energy, but execution has
been slow - slower than the rest of the private sector in Thailand," he
said.

Piyasvasti said the initial public offering of its PTT Oil and Retail unit
may come as late as the second half of next year, but that it would be
faster if not for burdensome government regulatory requirements.

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Link to Original Article:
http://www.nasdaq.com/article/thailands-ptt-looks-to-lng-partnership-deals-t
o-secure-supply-20170810-01442

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com