Energy stocks ride high on rising oil prices

PTT, PTT Exploration and Production, and Banpu were picked by analysts as rising stocks with an "overweight" rating. Electricity Generating, Glow Energy and Bangchak Petroleum were given a "neutral" rating.

Analysts from Seamico Securities, Tisco Securities and Kasikorn Securities said they had upgraded their price targets for PTT and Banpu. The revision is based on the assumption the world oil prices would be around US$90 to US$125 per barrel.

Their revision was revealed at a seminar entitled 'Thailand's outlook for energy and the petrochemical sector under the current government', held yesterday at the stock exchange.

PTT, the country's largest oil and gas conglomerate firm, looks likely to be forced by the government to import liquefied petroleum gas (LPG) and distribute it at subsidised prices. The country is expected to import 200,000 tonnes of LPG this year and 800,000 tonnes in 2009 via PTT.

"In fact, this will not affect PTT's net profit, but the cash flow," said Tanaporn Visaruthaphong, industry head for energy and utility of Kasikorn Securities.

She said the impact on PTT's cash-flow would be Bt4.2 billion, if the company imports 200,000 tonnes of LPG, and Bt17 billion, if it imports 800,000 tonnes.

Meanwhile, a leading energy expert says the government should launch a campaign to put energy conservation on the people's agenda - not only the national agenda - to reduce oil imports.

Manoon Siriwan also suggested zoning be implemented to reduce traffic congestion in some areas.

As an importer of oil and petroleum, Thailand would be affected substantially by skyrocketing world oil prices, Manoon said.

 Meanwhile, Energy Minister Poonpirom Liptapanlop, said the ministry would propose having E85 gasohol promotion on the national agenda at the Cabinet meeting today.

Manoon gave a 'B' rating to the government's energy policy, saying it was on the right track in terms of promoting alternative fuel such as biodiesel and gasohol. However, he suggested it should not subsidise all energy types unless this was a short-term measure.

Of oil, coal, natural gas and hydropower energy, Thailand relied on oil for 50 per cent of energy requirements in terms of value.

Manoon said the government should only intervene in oil prices if it was necessary, and for the short-term.

He said world oil prices tended to increase continuously as global demand for oil remained high. This year, demand and supply of world oil is expected to see parity at 86.6 million barrel a day. Next year, world oil supply of 88.1 million barrels a day is expected to be slightly above the world oil demand of 87.9 million barrels a day.

Manoon said the government's energy policy would determine the impact on the country. If the government subsidised LPG, the country would spend around Bt20 billion subsidising imported LPG.

For each US$1 per barrel increase in the world oil price, Thailand's retail oil price would rise by Bt0.02 a litre, he said.