February 8, 2017 5:37 am JST

Thailand's PTT aims to quadruple LNG imports

Supplies sought from Africa, ASEAN as domestic reserves run dry

YUKAKO ONO, Nikkei staff writer

PTT is expanding its LNG terminal in Thailand's Rayong Province. (Photo by Nozomu Ogawa)

BANGKOK -- 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.

Asia300

PTT Public Co., Ltd.

Thailand

Market(Ticker): BKK(PTT)
Sector:
Industry:
Energy Minerals
Oil Refining/Marketing
Market cap(USD): 32,800.00M
Shares: 2,856.29M
Asia300

PTT Exploration & Production Plc

Thailand

Market(Ticker): BKK(PTTEP)
Sector:
Industry:
Energy Minerals
Oil & Gas Production
Market cap(USD): 10,906.70M
Shares: 3,969.98M

Mitsui & Co., Ltd.

Japan

Market(Ticker): TKS(8031)
Sector:
Industry:
Distribution Services
Wholesale Distributors
Market cap(USD): 24,194.50M
Shares: 1,796.51M

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