The deal was signed with Rooks Homes Co Ltd, the operator of ferry services between Trat and Koh Chang.

PTT will sponsor the conversion of the ferry's engine to make it run on either diesel or gas, at a cost of about Bt600,000. PTT will also supply the company with natural gas for a three-month trial period.

"In the next stage, Rooks Homes plans to convert between three and five more ferries," said PTT's senior executive vice president, Chitrapongse Kwangsukstith. "This should save it more than Bt10 million in fuel bills, because the company uses one million litres a year, at a cost of between Bt20 million and Bt30 million." It is expected that three ferries will be converted this year, which should cut diesel consumption by 770,000 litres a year, costing Bt16 million.

If the project succeeds, Chitrapongse said other ferry service providers would be encouraged to switch from diesel to natural gas. PTT plans to reach out to ferry companies operating more than 100 ferries along the Chao Phya River, as well as trying to persuade fishing boats to convert.

Chitrapongse said gas was not a suitable fuel for trains because their heavy weight results in a low combustion rate. However, PTT will try to apply liquefied natural gas as a fuel for trains later on.

At present, natural gas for vehicles (NGV) is being widely adopted by taxi operators. Passenger cars should soon join the trend following the government's decision to reduce excise tax on new cars with NGV-compatible engines. Mercedes-Benz, Toyota and General Motors have announced their intention to produce vehicles with engines that run on natural gas.

Energy Business Department director-general Panich Phongpirodom said the number of NGV-driven taxis was expected to increase from 6,000 to 30,000 by the end of next year, and the speed with which all 50,000 taxis will be converted to NGV will depend on the speed of PTT's expansion of NGV stations. Some taxis are now using liquefied petroleum gas (LPG), better known as cooking gas.

"If all 50,000 taxis are converted to NGV, Thailand will be able to export an additional 50,000 tonnes of LPG a month, or 600,000 tonnes a year," Panich said. This should also reduce the Oil Fund's cooking-gas subsidy, which remains at Bt2.40 per kilogram. Altogether, if all taxis are converted to NGV, the country will reap more than Bt10 billion in benefits.

Thailand is currently promoting natural gas for vehicles because of the unstable nature of world oil prices.

Meanwhile, Chitrapongse said that the third natural gas pipeline in the Gulf of Thailand would begin operations in two months as scheduled. Every day, about 200 million cubic feet of gas from the Erawan field will be delivered by the pipeline to accommodate higher demand for electricity. The gas is expected to substitute for bunker oil, which is burned in power plants.

Gas fields in the joint development area (JDA) between Malaysia and Thailand will start coming on stream in the middle of next year, starting with a flow of 200 million cubic feet per day. The volume will be doubled later in the year. The gas from the JDA fields will feed a power plant in Songkhla and industrial plants in Rayong.

To provide a return on investment in the pipeline, transmission fees for the gas would have to be about Bt40 to Bt50 per million British thermal units (BTU) of gas. However, the fee will be based on an average of the cost of the new pipeline together with the fees charged for delivery down the older first and second pipelines. This will make it cheaper.

"It's up to the Energy Policy and Planning Office to decide whether the average fee will be raised from Bt19.50 per million BTU to Bt21," Chitrapongse said.