PTTEP to invest in Mozambique project
PTT EXPLORATION and Production is ready to invest US$1.5 billion in the production of liquefied natural gas in a Mozambique project after a joint venture secured orders for 8 million tonnes of LNG a year.
PTTEP chief executive officer Tevin Vongvanich said the company’s investment plan for 2015 and 2016 on the further development of petroleum fields would involve LNG production in Rovuma offshore basin Area 1 in Mozambique.
The total investment in the project will be about $20 billion, including the construction of an onshore LNG plant. Part of the investment will be from cash flow of shareholders in the gas field and the rest from loans. The major stakeholder in the field is Anadarko Petroleum Corporation.
With its 8.5-per-cent equity stake, PTTEP is expected to have to contribute $1.5 billion (Bt50 billion) to this project over the next four or five years. PTTEP can rely partly on its cash flow, but might also borrow part of the funds.
Tevin said Anadarko had conducted technical surveys that found the natural-gas reserves in Area 1 to be adequate for LNG production. However, Area 4 requires additional surveys. If the gas reserve in Area 4 is adequate, both Areas 1 and 4 will be developed simultaneously. However, this would mean the company would have to talk with the shareholders in Area 4 first.
Construction to begin soon
The LNG production plan projects about 12 million tonnes of LNG annually from Area 1. The gas-field project has already secured long-term contracts for 8 million tonnes of LNG a year.
The remaining 4 million tonnes of annual output could be sold in the spot market.
As for the land-based LNG production plant, Anadarko has already selected a construction contractor; construction of the plant is expected to begin soon.
As for the development of other oil and gas sources, such as Myanmar’s M-3, Algeria’s Hassi Bir Rekaiz, Marina Oil Sands in Canada and the Cash-Maple gas field of PTTEP Australasia, PTTEP will decide next year on whether to proceed further.
In the past five months, PTTEP has improved its cost-cutting plan in response to weak global oil prices. The cost reductions include the postponement of some project developments.
The company was able to reduce costs by $600 million this year, from its earlier expectation of overall expenses of about $4.8 billion in 2015.
PTTEP expects revenue growth of 3-6 per cent this year despite the downward trend of gas prices.
As for its concessions for petroleum fields in the Gulf of Thailand, which are due to expire in 2022 and 2023, PTTEP plans to maintain production levels until 2017, pending clearer government policy on how it should proceed after their expiration.
If there is no clearer direction, the company will consider lowering production from these fields.
After the concessions’ expiration, all the company’s assets in these fields will be transferred to the state, and it is expected that there will still be some reserves left in the fields. PTTEP and other shareholders in the fields such as Total and BG are ready to co-invest with the state sector to develop such fields further, Tevin said.
