Govt agency vows to 'clear up' issues surrounding LPG, oil sales outside Thailand

LPG in Myanmar is priced at about Bt29 per kilogram, higher than about Bt23-Bt24 in Thailand. 

While there is some criticism on social media that oil companies should not export LPG since Thailand still cannot produce enough petroleum products to satisfy domestic needs, there is nothing wrong with that since local firms imported LPG for the export portion, director-general Witoon Kulchroenwirat said yesterday.

“And the sale prices are based on the import prices,” he said.

According to the department’s figures, LPG exports reached 15.6 million kilograms in the first half of this year, double the 7.5 million kilograms in the same half of 2014.

However, domestic LPG consumption declined 8.7 per cent in the period to an average 18.53 million kilograms per day (mkg/d). 

Declines were seen in most applications, especially in the petrochemical industry, whose demand fell 14.6 per cent to 6.26mkg/d as petrochemical plants shifted to naphtha to exploit its lower price. 

LPG consumption in the transport industry dropped 7.7 per cent to 4.92mkg/d. Household use was down 6.0 per cent at 5.72mkg/d. The only exception was manufacturing, which used 4.6 per cent more LPG at 1.63mkg/d.

LPG imports decreased 37.6 per cent to 108mkg/d in the first half, because of the decline of LPG usage in the petrochemical industry and the recent LPG price restructuring.

First-half consumption of petrol increased by 14.0 per cent to 25.77mkg/d and diesel by 2.7 per cent to 61.37mkg/d, while natural gas for vehicles (NGV) slipped by 0.8 per cent.

Despite the sluggish economy, petrol demand headed up from the low base of last year. Prices were lower this year, encouraging some motorists to shift from LPG to petrol. In the first half, the number of petrol-engine vehicles increased by 2.2 per cent and diesel-engine vehicles by 4.6 per cent.

Oil imports increased 5.4 per cent to 957,000 barrels per day during the first half. Crude-oil imports rose 10.9 per cent to 891,000bpd, while imports of finished oil products tumbled 36.9 per cent to 66,000bpd. 

However, thanks to shrinking world oil prices, the crude-oil import bill eased 39.7 per cent to Bt52.61 billion a month, while finished-oil-product import expenses ran at Bt3.75 billion a month.

During the same period, finished oil exports increased 33.4 per cent to 199,000bpd, but by value decreased 21.4 per cent to Bt13.14 billion a month.

To aid oil-palm farmers, the department has required oil traders to increase the minimum biofuel content in biodiesel from 6 per cent to 6.5 per cent on Monday. The measure is expected to help boost palm-oil consumption by 8,000 tonnes per month to 84,000 tonnes a month.

The maximum biofuel content was left at 7 per cent since automakers still do not guarantee their vehicles for a higher level.

The department is also considering increasing the penalty on sellers and holders of substandard oil products. During the first half, out of 6,486 traders and 11,125 random samples, it found 25 traders and 28 samples of inferior products.

“Most of the substandard products, we assume, were lower-priced [fuel] sold as higher-priced products, and oil products smuggled from neighbouring countries. This was especially found in independent |tations in the northeastern and southern provinces,” he said.

After the May 14 resolution of the National Energy Policy Committee to reduce the country’s oil reserves from 43 days to 25 days of consumption by cutting the finished-product reserve to 1 per cent from 6 per cent and keeping the crude-oil reserve at 6 per cent, the department will begin cutting the finished-product reserve requirement to 5 per cent on August 1, 4 per cent on September 1, 2 per cent on October 1 and 1 per cent on November 1. 

The move is expected to help save about 9 satang per litre on fuel prices.