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PTT banks on natural gas demand

PTT EXPECTS sales revenue to reach Bt2.97 trillion this year, up from around Bt2.84 trillion last year, as domestic demand for natural gas surges, said Phichin Aphiwantanaporn, vice president for investor relations.

He expects the global oil price to stabilise at US$105 per barrel this year.

He added that PTT had evaluated whether its overseas assets have performed as effectively as planned. It will consider liquidating those that have not done well.

Among them are oil-palm plantations in Indonesia, which have suffered losses and failed to meet production targets.

PTT continues to seek new opportunities for investment. Of the company's five-year investment plan (2014-18) totalling Bt326 billion, more than half will be spent overseas.

Most overseas investment will be in PTT's main natural-gas business, such as the construction of gas pipelines, the expansion of its capacity to import liquefied natural gas, and expansion of energy business in overseas frontiers.

He said PTT maintained its target for coal production and sales at 11 million tonnes from Indonesian mines, the same level as last year, while focusing on efficiency improvements to lower costs amid low coal prices, which are expected to stay in a range of $70-$75 per tonne.

"Most investment comes from cash from operating activities and cash in hand. At present, PTT has about Bt60 billion to Bt70 billion cash in hand.

"It's sufficient [for investment] without fund mobilisation. In the second half of this year, the company plans to raise Bt18 billion through a debenture issue replacing an old one," he said.

PTT expects to gain extraordinary income from a share listing of its subsidiary Global Power Synergy in the latter half of this year and Star Petroleum Refining's listing midyear. PTT holds a 36-per-cent stake in SPRC, while Chevron owns 64 per cent.

PTT is expected to post a loss of about Bt30 billion from its businesses providing natural gas for vehicles (NGV) and liquefied petroleum gas (LPG). If the government allows their prices to rise, these businesses will improve.

Meanwhile, subsidiary PTT Exploration and Production cut its sales target to 324,000 barrels of oil equivalent per day from 337,000 after a decline in production following downsized investment in the Kai Kos Dehseh (KKD) oil-sands project in Canada, said Yongyos Krongphanich, senior vice president for finance at PTTEP. The Montara field off Australia also was not able to produce at full capacity because of bad weather.

Based on the investment adjustment for KKD, PTTEP's overall five-year investment plan also decreases from $27 billion to $25 billion (Bt807 billion).

In late January, Norway's Statoil and PTTEP signed an agreement to divide their respective interests in the KKD oil-sands project in Alberta. Previously, PTTEP held a 40-per-cent stake and Statoil 60 per cent.

After the agreement, which is expected to take effect in the third quarter of this year, the Thai exploration and production company will hold three production areas, which have not started producing yet, while Statoil holds the other two.

Yongyos said the cut in PTTEP's 2014 sales target came after the KKD adjustment and a one-month delay in natural-gas production of Zawtika field in Myanmar, now expected to commence in the second quarter.


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