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PTT sets $2B diversification, expansion plan

Oil firm to go into power generation
/ 07:45 AM October 23, 2014
PTT

Screengrab from http://www.pttphils.com/

MANILA, Philippines–Oil firm PTT Philippines Corp. is embarking on a venture that would diversify its operations to include power generation and the expansion of its parent firms’ global liquefied natural gas (LNG) footprint.

Wisarn Chawalitanon, country CEO and president of PTT Philippines (a subsidiary of PTT Public Company Ltd. or PTT PCL), said the parent firm was considering investing in an integrated LNG import terminal and power plant project. Investment could reach about $2 billion for the entire integrated project, he said.

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“The problem with an LNG terminal is that it cannot stand alone. There should be demand so there should be a power plant. Otherwise, we cannot compete in terms of pricing,” Chawalitanon said.

PTT is already scouting in Luzon for sites that could handle capacity ranging from 500 megawatts (MW) to 1,200 MW.

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The company is also in talks with two potential partners to explore various investment prospects, which would likely be in Luzon.

“We would like to invest in LNG because that will be more advantageous,” Chawalitanon said, citing PTT’s expertise in this fuel type. He also said PTT is talking to the Manila Electric Co. on a possible deal to supply requirements of the largest electricity distribution utility in Luzon.

Global commodities information provider Platts said state-owned PTT of Thailand seemed to be one of the few beneficiaries of the weakening LNG spot market in Asia Pacific. PTT has only one long-term contract (deliveries to start 2015), enabling it to import more competitively priced spot orders via bidding.

While PTT could maximize its LNG network through the proposed integrated terminal and power facility venture, the Philippines would benefit through fuel mix diversification.

The Department of Energy, which wants to curb the country’s dependence on coal and oil but has yet to mandate LNG investments, said it preferred that private ventures develop the local LNG market.

In the Philippines, PTT is mainly involved in fuel retail at this time and is embarking on a five-year expansion program to the tune of about $47 million (P2.1 billion) that will fund 75 new stations in addition to its existing 70, as well as new depots.

Chawalitanon said, “Our long-term plan is to also expand in Visayas and Mindanao but our thrust for now is to establish first our presence in Luzon.”

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LNG, gas chilled to less space-consuming liquid form for earlier transport, makes up 70 percent of Thailand’s fuel source for power generation. A fourth of its LNG supply is imported from Myanmar, where PTT wants to build a potentially $3-billion LNG receiving terminal linked to existing gas fields. That would be its third LNG facility after the $801 million Map Ta Phut LNG regasification unit in Thailand and an expansion phase that would double the capacity of the original structure.

PTT PCL is involved in electricity generation, petrochemical products, oil and gas exploration and production, and gasoline retailing businesses in Thailand. Its affiliated companies include PTT Exploration and Production, PTT Global Chemical, PTT Asia Pacific Mining and PTT Green Energy.

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TAGS: Investments, LNG, LNG terminal, oil and gas, PTT, PTT Philippines, Wisarn Chawalitanon
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