Thai PTT scraps Qatar LNG deal, plans expansion
Rayong (Thailand), September 7, 2011
Thailand's largest energy firm PTT has cancelled a deal to buy one million tonnes a year of liquefied natural gas (LNG) from the world's top exporter Qatar after a recent price surge, and has signed alternative contracts with two suppliers.
State-controlled PTT also plans to pump $400 million to double the capacity of the country's first LNG terminal to 10 million tonnes.
The company was in talks with several suppliers on pricing of the fuel and planned to import 2.5 million tonnes after the middle of 2012 to 2014, Wichai Pornkeratiwat, senior executive vice-president for its gas business, told reporters.
'When things change, we can cancel that. What we signed was just an MoU,' Wichai said referring to a memorandum of understanding PTT inked with Qatar in 2008 to buy one million tonnes of LNG a year from late 2011 to feed the LNG receiving terminal, also the first in Southeast Asia. PTT declined to give details about its suppliers.
Rising LNG demand in the wake of the Japanese earthquake in March has pushed up LNG prices in recent months to more than $16 per million British thermal unit (mmBtu), up from $7-8 mmBtu, during the pre-quake period, PTT CFO Tevin Vongvanich said.
'It's the sellers' market now after prices surged as a result of the nuclear crisis in Japan,' Tevin said, referring to the aftermath of the quake and tsunami which also crippled the country's nuclear power plants and triggered a huge radiation leak.
LNG, gas chilled to liquid form for sea transport, is a key fuel source in Thailand, which uses natural gas to generate about 70 percent of its electricity.
On Wednesday, PTT officially opened the 5 million tonne a year LNG terminal at the Map Ta Phut industrial estate in the eastern province of Rayong.
The $880 million terminal consists of one jetty and two storage tanks that together can handle up to 5 million tonnes per year (tpy) of LNG, the amount Thailand plans to gradually import after 2011.
The terminal is capable of being developed into an LNG commercial hub for Southeast Asia, which would further enhance Thailand's energy security, PTT said.
Chief executive Prasert Bunsumpun said PTT planned to expand the capacity of the LNG terminal to 10 million tonnes, expecting construction to be completed in 2016 with an estimated investment of $400 million.
'We are discussing with the Energy Ministry about the expansion. If it approves the plan, we will start the project immediately,' Prasert said. Shares of PTT rose almost 1 per cent on Wednesday, compared with the 0.8 per cent rise in the main index.
Thailand is among a growing number of new LNG buyers in Asia as imports of the cleaner-burning fuel allow countries to diversify away from oil and coal.
Singapore, Indonesia, Malaysia, Pakistan, Bangladesh, Vietnam and possibly Sri Lanka and the Philippines are expected to become LNG importers in the next few years, adding to rapidly growing Asian demand for the supercooled fuel.
Thailand's terminal comes ahead of projects in neighbouring Malaysia and Singapore. Malaysia is building a 3.8 million-tpy LNG terminal in western Malacca state, due to be ready in the middle of next year, and is looking at building another in southern Johor state.
Singapore, which aims to become a business centre for LNG, is expected to launch a 6 million-tpy terminal in early 2013.-Reuters