PTT suspends pipeline project in south as demand dries up

PTT will suspend a Bt22-billion natural gas pipeline project in the South because demand for NGV has dried up along with the plunge in oil prices.

PTT executive vice president Nattachart Jaruchinda said yesterday that with economic growth in a downtrend, plans would have to be reviewed for laying NGV (natural gas for vehicles) pipelines in the North, the Northeast and South at a cost of more than Bt50 billion over the period from this year to 2011.

From its current feasibility study, PTT will put a hold on the construction of the southern NGV pipeline, due to the low commercial viability and high capital requirement of Bt22 billion.

NGV demand in the South is lower than 10 per cent of the country's demand of 2,970 tonnes per day, he said.

The combined construction cost for the NGV pipelines in the North and Northeast is nearly Bt30 billion.

The new pipeline's delay would not derail the company's NGV business expansion plans, since it has NGV pipelines in Songkhla, which distribute NGV to the lower South.

But the southern NGV pipeline project could be revived if NGV demand increases from the industrial sector in the future.

PTT is conducting the feasibility study for the northern and northeastern NGV pipeline projects and the cost could be adjusted downward to reflect the falling prices of materials. The study is expected to be completed next year.

PTT's plan to expand its NGV pipeline routes and NGV service stations would also be subject to change if the government declines to hike the NGV price next year to Bt12 per kilogram. Currently NGV retails for Bt8.50 against the production cost of Bt14.30.

The number of vehicles applying to PTT for retrofits with NGV engines in July and August dropped by 50 per cent from the same months last year, due to the falling oil price, which prompted car owners to return to using petrol.

PTT plans to increase its NGV filling stations to 322 by year-end, down from the original plan of 355. PTT's NGV sales volume stands at 3 million litres per month, up 6-7 per cent from early this year.