PTT rethinks five-year plan to suit government policy

SET-listed PTT Plc, the oil and gas conglomerate, is revising its five-year capital expenditure plan for the entire group to align with the government’s economic measures, particularly the emphasis on S-curve industries and the rise of the Eastern Economic Corridor (EEC).

Sriwan Eamrungroj, senior executive vice-president for corporate strategy, said the capex revision will complement the government’s policy to generate high economic growth over the next decade.

Mrs Sriwan said other factors that led PTT to review its capex included human resources and maximisation of assets.

During 2014-15, when the global oil price fell below US$40 (1,323 baht) a barrel, PTT succeeded in cutting operating costs. PTT Exploration and Production Plc (PTTEP), for example, cut its production cost from $43.5 a barrel in 2014 to $30.5 in 2016.

“We should see what should be added and what should be cut in capex by comparing existing assets,” Mrs Sriwan said.

At the end of the first quarter, PTT reported cash on hand of $4 billion (132 billion baht) and a debt-to-equity ratio of 0.73. The company subsequently received a huge amount in loans.

By the end of the second quarter, combined capex for the entire group was budgeted at 1.6 trillion baht for 2018-22. Of the total, 300 billion baht was earmarked for PTT Plc.

Mrs Sriwan said new global trends such as energy storage, electric vehicles, renewable energy, smart cities and ageing societies will be taken into account in the company’s capex revision.

The power business arm, Global Power Synergy Plc, has diversified by investing in a new factory for lithium ion batteries worth 1 billion baht in the EEC area.

The capex revision also covers the budget for corporate social responsibility, aiming to add more value to CSR projects.

Meanwhile, Energy Minister Anantaporn Kanjanarat has reiterated the terms of reference for the auctions of the Bangkot and Erawan gas blocks.

The Bongkot block (B15-B17) is now operated by PTTEP, and the Erawan block (B10-B13) is run by Chevron. The companies have a combined gas output of 2.08 billion standard cubic feet a day, or almost half of Thailand’s gas demand.

Gen Anantaporn said the auction is under final review by the Council of State on the issues of regulation, benefit sharing and proper business model. The auction will take place in November, he said.

PTT shares closed yesterday on the Stock Exchange of Thailand at 416 baht, down four baht, in heavy trade worth 1.17 billion baht.