PTTEP pushing to close M&A deal by year’s end
PTT EXPLORATION and Production (PTTEP) has been striving to conclude a merger and acquisition deal by the third or fourth quarter this year, the company’s president and chief executive officer Somporn Vongvuthipornchai has said.
However, he declined to provide details on the deal, just adding that the company’s main M&A focus was in Southeast Asia.
He said that PTTEP currently had cash in hand of US$4 billion (Bt137.3 billion). However, its M&A spending this year is not likely to exceed $2 billion.
“I’ve pushed heavily to make the deal happen this year,” he added.
The company, together with its major shareholder PTT, is also looking for opportunities to invest in upstream and mid-stream liquefied-natural-gas businesses, in a joint venture between PTT and PTTEP expected to be set up this year. The LNG output will be supplied to the Thailand market.
PTTEP will also bid for a contract in the Bongkot petroleum field, which it currently operates, and the Erawan petroleum field, which US oil giant Chevron currently operates. Both fields are in the Gulf of Thailand.
For the Bongkot field, PTTEP will join with existing partners to bid for the contract. PTTEP already holds a 44.445-per-cent stake in the field.
For the Erawan field, he said PTTEP was in talks with Chevron on possible cooperation to enter the bid jointly. The company is also in negotiations with Chevron on increasing its shareholding in the Erawan field from the present 5 per cent if they win their joint bid. If the talks with Chevron on a joint bid fail, one of the options is for PTTEP will bid on its own, Somporn added.
The National Energy Policy Council has resolved for the government to put to bid the Erawan and Bongkot fields, whose concessions will expire in 2022 and 2023 respectively.
The combined output of the Erawan and Bongkot gas fields is 2.2 billion cubic feet per day, or 76 per cent of the gas production in the Gulf of Thailand. The Department of Mineral Fuels is holding public hearings on three draft ministerial regulations on benefit-sharing of the gas fields related to the production-sharing contracts (PSCs).
Earlier the government granted rights to operate the fields on a concession basis. But under the pending amended petroleum law, the Energy Ministry will define which fields will be operated under concessions, PSCs or service contracts.
Somporn said he had no preference between the concession or PSC method, as both could be designed to offer almost the same benefits to the state.
However, he noted that the winning bidders might operate with less flexibility under the PSC regimen than under the concession regimen, as the PSC method paves the way for the state to have a big say in the field operators’ processes.
He added that the Department of Mineral Fuels was already aware of this point and it remained to be seen how it would address this issue.
PTTEP is waiting to see the terms of reference for bidding on both the Bongkot and Erawan fields. The Department of Mineral Fuels is reportedly expected to complete the TOR for both fields within a few months.
