Thailand’s Pttep to boost output in Southeast Asia
As oil prices recover, Thailand’s energy company PTT Exploration and Production (Pttep) is looking closer to home in Southeast Asia to boost its reserves and output.
Cost-cutting measures in the upstream sector are motivating national and international oil companies to invest in exploration and production despite many producers remaining wary that surging U.S. oil output could hold crude prices back.
Since the oil crisis that began in 2014 and saw prices slump to less than US$30 a barrel in early 2016, Pttep has cut costs and increased efficiency, bringing its average cost of oil and gas output to US$29 per barrel last year, down from US$43 per barrel.
“Now we’re coming back more to the region. We’re good friends with (Malaysia’s) Petronas, but we didn’t really do things together. Now we have more collaboration and we have a project to work together,” Phongsthorn Thavisin, Pttep’s president of exploration and production, said on the sidelines of the OTC Asia conference.
Pttep, which has US$4.5 billion cash on hand, is also eyeing expiring Middle East concessions that can boost its output immediately, and plans to invest in a gas-to-power project in Myanmar by 2022-2023, tapping into gas from blocks M3 and M9 to meet its neighbor’s energy demand, Phongsthorn said.
“We’re looking to extend ourselves a little,” he said.
Still, ratings agency Fitch expects Pttep’s reserve profile to remain weak for the next two years as the majority of its assets are located in Thailand, where oil and gas reservoirs are scattered and relatively small.
Pttep has already invested in 10 % of Train 9 of Malaysia LNG and is exploring offshore block SK410B in Sarawak with Petronas, Phongsthorn said. The company is also in the second round of bidding for a stake in another offshore Sarawak block, SK316, seeking a 10-20 % share, he said.
Last year, state-owned Petroliam Nasional Bhd (Petronas) [PETR.UL] kicked off a process to sell a stake of up to 49 %, worth an estimated US$1 billion, in the SK316 offshore gas block in Malaysia’s Sarawak state.
Total and some Japanese firms are among others keen to bid for the asset, sources have said.
PTTEP also plans to bid for Thailand’s Erawan and Bongkot gas concession licenses in an auction scheduled for April, another chance to raise its output and reserves.
The government will announce the license winners in December, which will give the companies time to invest to sustain a combined gas output of 1.5 billion cubic feet a day from the fields before the concessions expire in 2022, Phongsthorn said.
Pttep holds an 8.5 % stake in a US$15 billion liquefied natural gas (LNG) project led by Anadarko Petroleum in Mozambique. The consortium will build two LNG trains with a total capacity of 12.88 million tonnes per annum that are slated for completion in 2023.
“We are still trying to work out if PTT could commit (its) volume (from Mozambique) either for Thailand or trading,” Phongsthorn said.
“The LNG market in the next few years could see more demand and supply could shrink a little. Everyone stopped investing for some time and our industry needs time (to develop assets). I think in the future, you’ll see short supply,” he said.
Pttep is also exploring solar power and batteries technologies for new revenue stream as it adapts itself to a new environment, Phongsthorn said.
Falling costs for solar panels have made them a viable electricity source, and oil companies expect electric vehicles to reduce oil demand after 2030.
(EOG)
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