Tevin Vongvanich, chief executive officer of the country’s largest energy conglomerate, said yesterday that the transformation of the energy industry from fossil fuels to renewable energy and electric vehicles, plus the depletion of domestic petroleum resources, would be the two factors that “pull down” the group if it does nothing.
PTT has devised a strategy, comprising “Do Now” for productivity improvement and “Decide Now” for extending growth of its existing businesses, such as by expanding to the electricity value chain, LNG (liquefied natural gas) value chain and regional markets.
“We will seek an opportunity for investment in liquefaction facilities together with PTT Exploration and Production.
“The electricity value chain spans from electricity generation and battery technology to other supporting components such as charging stations” for electric vehicles, he said.
PTT will also have to find a new “S-curve”, but since jumping into new territory would carry risks, the group is embarking on the third part of its strategy called “Shape Now”.
This is for the setting up of Express Solutions, also dubbed “ExpresSo”.
The new business unit aims to stimulate innovation, creativity, the search for new ideas and businesses, and the follow up of evolving technologies and consumer behaviour.
PTT will launch a venture-capital fund to incubate and nurture ideas and invest in potential technologies.
PTT expected to finalise next month its negotiations to purchase more than 3 million tonnes of LNG per year under 10-to-15-year contracts.
Subject to government approval, the move will increase its LNG long-term commitments to more than 5 million tonnes annually from the current 2-million-tonne contract that it had sealed with Qatar.
“There might be a surprise. We have received many good offers,” he said.
Each LNG supplier will deliver about a million tonnes per year to PTT.
The group has postponed the signing of a long-term agreement to buy 2 million tonnes of LNG annually from Shell Eastern Trading and BP Singapore, citing the availability of cheap LNG in the spot market.
PTT will in December seek approval from its board of directors to increase its budget for infrastructure projects such as LNG receiving facilities, and natural-gas and oil transmission systems.
However, the group’s capital-expenditure budget for the next five years will increase only slightly from the current Bt297 billion, since some other projects will be postponed or cancelled.
Nitima Thepvanangkul will become the first female chief financial officer at PTT when she succeeds Wirat Uanarumit, who will move to head PTT’s Upstream Petroleum and Gas Business Group on October 1.
He will replace Pitipan Tepartimargorn, who is retiring.
Both oil and gas prices in the second half of this year are expected to rise from the first half, although PTT’s oil-refining margin is expected to be thinner and petrochemical spreads to be unchanged from the first half, Tevin said.
PTT reported rises of 4.8 per cent in first-half net profit to Bt48.5 billion and 13 per cent in first-half operating profit.
Despite a drop of 23 per cent in sales revenue due to the slump in global oil prices, the energy group saw its earnings before interest, tax, depreciation and amortisation decrease by only 3 per cent from a year ago.
PTT executives attributed the strong operating performance to the group’s fully integrated business portfolio.