PTTEP eyes LNG blocks with existing PTT deals

The strategy of PTT Exploration and Production this year is to invest in liquefied natural gas blocks that have sales contracts with its parent PTT, which is part of its mergers and acquisitions plan. It expects to secure at least one LNG block this year.
M&A is not included in PTTEP’s investment budget of Bt150 billion this year. That budget is for expanding the production capacity of its existing blocks, continuing the feasibility study for the floating liquefied natural gas project in Australia, and exploring new blocks under concessions in many locations, including Burma.
The company will sell some of its shares in concessions for deepwater petroleum blocks in the Andaman Sea and in Indonesia to other companies with expertise in this kind of E&P in order to avoid risk from a field that the company is not familiar with.
Anon Sirisaengtaksin, president and CEO, recently said PTTEP would follow PTT to negotiate with LNG owners that PTT is dealing with for LNG contracts. The company is targeting shares in LNG projects from which PTT has to purchase gas in order to have a business advantage.
“Every company that PTT deals with for LNG contracts, PTTEP will negotiate to acquire a stake in that firm. This is our strategy to grow from M&A deals. There are some that we’re in the process of negotiating. We expect to accomplish at least one deal this year,” he said.
PTT has to import LNG to serve domestic demand. The import proportion of LNG is increasing every year.
Anon did not reveal the M&A budget for the LNG blocks it expects this year.
PTTEP was continuing its collaboration with Statoil, Norway’s national oil company, to seek opportunities to develop petroleum projects in locations such as South America and Africa, which may lead to new E&P projects or M&A deals. The company is also smoothing the way for Statoil to enter E&P projects in Asia. It is possible for both companies to cooperate in petroleum E&P in this region.
PTTEP owns three blocks in the Andaman Sea off Thailand. It is in talks with some E&P companies with expertise in this field, including Royal Dutch Shell. It expects to find partners for all its deep-water petroleum exploration projects this year.
“The proceeds from selling stakes in these projects is not a significant amount. The benefit for us is to avoid risk from the exploration of deepwater blocks that we don’t have much expertise in, and to reduce the exploration cost,” he said.
Of the Bt150-billion invest-ment budget this year, Bt100 bil-lion will go for E&P in existing |projects, which is higher than |nearly Bt100 billion last year. The company’s five-year investment spending is set at Bt600 billion, of which Bt350 billion is capital expenditure. PTTEP targets to produce 290,000 barrels of oil equivalent per day in 2012, an increase of 8 per cent from about 265,000 boed in 2011.
The Bongkot South field will start feeding gas in March, while the Montara project in Australia, after a fire accident two years ago, will resume operation in either the second or third quarter of this year.
The company was waiting for the exploration results for Block M3, one of the petroleum blocks that was awarded to it by the Burmese government under concession. It is expected to produce good quality gas that can be fed to petrochemical plants. If the result is good, Burma might invest in the gas separation plant and gas-fired power plants. The company expects to verify the quality of gas from the block this year.