PTT boosts ASEAN’S economic potential

Natural gas is the most rapidly growing primary energy source in Thailand, but reserves are declining. More needs to be done to alleviate the shortage that will soon hit the nation, by increasing gas exploration inland and outsourcing more goods and services

Zawtika: a PTTEP natural gas production platform in Myanmar. The company is doing much to promote the growth of the ASEAN region through energy production
Zawtika: a PTTEP natural gas production platform in Myanmar. The company is doing much to promote the growth of the ASEAN region through energy production 
Author: Dr Pailin Chuchottaworn, President and CEO, PTT group
February 20, 2015

Keeping up with the energy demands of both the developed and developing world has presented a problem for governments and the private sector. Governments want to ensure their energy security, while the private sector tries to tap into the world’s limited energy resources. One major international organisation that is a highly significant player on the global energy stage and known for its innovation and making canny investment decisions in connection to oil and gas exploration is the PTT Public Company (PTT).

PTT plays the important role in moving the economic success of the ASEAN forward. The PTT organisation is by far the largest oil and gas company in Thailand – owned by the Thai state, it derives its name from formerly being called the Petroleum Authority of Thailand. The company is the owner of liquefied petroleum gas (LPG) terminals throughout Thailand and underground gas pipelines in the Gulf of Thailand.

This is only the start of PTTs global operations. It is indeed a global company, employing more than 9,000 people worldwide and is involved in oil and gas exploration, selling gasoline, manufacturing petro-chemical products and generating electricity. PTT is one of the biggest organisations in Thailand, and is the only Thai corporation that is listed on the Fortune Global 500 list.

Natural gas in Thailand
According to the Asia Pacific Energy Research Centre (APERC), natural gas is the most rapidly growing primary energy source in Thailand, with the growth averaging about 4.4 percent per year from 2010 to 2025. The APERC also states that Thailand’s limited production of natural gas will require its imports of natural gas to expand considerably. The Thai Energy Ministry believes that natural gas production in Thailand will peak in 2017.

The PTT organisation is by far the largest oil and gas company in Thailand

The bottom line is that while in the past Thailand has had significant natural gas resources and still has substantial resources, it faces an impending gas shortage – and this needs to be solved (see Fig. 1). Some of this may be sorted by increasing oil and gas exploration in Thailand itself, taking steps to reduce declines in the gas endowment of mature fields, and promoting exploration of other gas fields that are technically challenging.

Like other countries in the Asia-Pacific area and indeed around the world, Thailand has hopes of buying some of the gas that is flowing from enormous shale gas deposits in the US. However, these measures, important as they are, are not enough to solve the fundamental flaw that Thailand’s reserves of oil and gas are depleting relatively fast.

Energy is a psychological as well as a physical asset. For industry and commerce in a nation to flourish, entire business communities need to know that access to required energy for forwarding the industry and commerce for profit and success is sound and secured for the foreseeable future. For companies in Thailand, PTT is developing energy resources and acquiring significant stakes that can be used to augment the country’s own dwindling energy endowments.

Currently, PTT is faced with a situation where regional oil and gas resources in Thailand are increasingly unable to meet the Thai demand for power. The company travels the globe to spot exciting and important opportunities for investment – for investment in oil and gas exploration, and for buying a stake in particularly promising fields. PTT has invested billions in US dollars to increase its foothold in the worldwide energy market.

ASEAN’s economic ranking
In the Association of Southeast Asian Nations (ASEAN) – that is, Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam – the economic success of the region and the social progress with the socio-cultural evolution in the area has led to greater demands for energy.

If ASEAN were a single entity, it would rank as the sixth largest economy in the world, behind only the US, China, India, Japan and Germany. The total population of the ASEAN is around 615 million, and its combined nominal GDP in 2013 was estimated as being around $2.4trn.

Despite this economic success, there are clearly considerable differences between the members of the ASEAN, which remains a significant challenge. But the energy and vigour of the ASEANs commitment to working together to create ever-increasing mutual prosperity is undisputed, and one of the most exciting developments is the aim of creating a single market and production base with a free flow of goods, services, investments, capital and skilled labour by the year 2020.

It’s aimed for 2015 that the ASEAN Economic Community (AEC) will create and enable the formation of a single market and production base in the region – which is a highly competitive economic area, a region that provides equitable economic development, and above all that the ASEAN will become fully integrated into the global economy.

Sustainable global connections
Today, as well as operating in the ASEAN region, PTT has operations in North America, Africa, Australia and the Middle East. It is an organisation that is active in the oil, gas, coal, bio-fuel and renewable sectors. The company has a particularly significant commitment to sustainability, and has a worldwide reputation for seeking opportunities to make use of sustainable energies wherever this is feasible.

Most of PTTs exploration and production business is carried out through the subsidiary PTT Exploration and Production Company (PTTEP). With this, it has invested in oil and gas exploration opportunities around the world. Its policy is wherever possible to undertake investments in fully integrated natural gas businesses that cover the entire chain of natural gas exploitation from exploration and production, procurement, transportation, to gas separation and the actual marketing of natural gas. PTT also invests in gas related businesses – both domestically and internationally – as well as developing new businesses that offer significant growth potential.

Today the company also plays an extremely important role in contributing towards maximising collaboration between Thailand and the other nations of the ASEAN area of energy. The entire cultural and commercial approach of PTT is to promote collaborations and to identify opportunities between energy organisations in the ASEAN, resolving problems that might otherwise inhibit the potential level of communication. PTT sees its business as not only investing in oil and gas exploration, but also in engineering cultural and commercial connections between oil and gas companies in the ASEAN region and indeed worldwide, in order to maximise good business practice.

Thailand's natural gas reserves

PTT is due to become the Secretary in Charge of the ASEAN Council on Petroleum (ASCOPE). In this role, the company will be the core leader that pushes ASCOPEs operations in line with ASEANs energy collaboration strategies, while taking every step to ensure there is energy security and sustainability throughout the ASEAN region. PTT also takes part in the financial industry in order to ensure that less developed ASEAN countries have opportunities to make crucial investments in energy resources – both within their own countries and abroad.

A dynamic organisation in the energy business within the ASEAN and worldwide, the PTT group devotes its own efforts to contributing to the development of energy and petrochemical businesses in every ASEAN country, and beyond.

For example, in Brunei it is currently strengthening relationships with local producers to capture crude oil export volume for trading; in Cambodia PTT is supplying LPG and petroleum products for domestic consumption; in Indonesia it is exploring growth opportunities throughout the country and taking part in new explorations; in Laos PTT is developing oil and hydropower; in Malaysia it is contributing to complete the supply chain in fuel oil trading; in Myanmar it is conducting feasibility studies of gas-fired power plants; in the Philippines PTT is implementing operation excellence in its existing oil business operations and actively growing in oil retail business; in Singapore PTT is expanding its crude oil, condensate, petroleum and petrochemical products and other commodities trading; and in Vietnam it is helping to build a large-scale petro-chemical refinery complex.

For the PTT group, the energy business is about collaboration and fostering economic growth within the ASEAN and beyond, as well as using all of its own technical skills in exploring new fields, and the opportunities to find the energy that people across the globe need for continued economic success.