Thailand discusses purchasing of crude oil at 'friendly' price
The energy and foreign affairs ministries are negotiating with oil producing countries, including Saudi Arabia, the purchase of crude oil at lower than the global market price, Deputy Finance Minister Santi Promphat said on Tuesday.
“We are lucky the government has successfully revived diplomatic ties with Saudi Arabia for the first time in over 30 years,” he said. “We hope Saudi Arabia agrees to sell us oil at a friendly price, at least until the Russia-Ukraine conflict is over.”
Finance Minister Arkhom Termpittayapaisith meanwhile warned a rise in global energy prices "could cause domestic consumption to slow down”.
Arkhom said the war could produce a global economic impact that causes Thailand’s gross domestic product this year to miss the lower end of the estimation at 3.5 per cent expansion.
The National Economic and Social Development Council (NESDC) last month estimated that Thai GDP for 2022 would rise by 3.5 to 4.5 per cent thanks to increasing domestic demand, exports and an accelerating recovery in tourism after Covid-19 restrictions were lifted. The council reported a 1.9 per cent GDP expansion in the last quarter of 2021, and 1.6 per cent expansion for the whole year.
“The ministry wanted to see the economy in 2022 expand at 4 per cent, which is a median of the estimation made by the NESDC,” Arkhom said.
“However, the current global situation is volatile and requires reevaluation periodically. We estimate that in a worst case scenario, the 2022 GDP could be slightly below the 3.5 per cent expansion, as the value of exports to the Russian market is only 32 billion baht, or less than one per cent of our overall exports,” he pointed out.
“Meanwhile, the tourism sector, which had set a target of 7 million foreign tourists this year, may have to adjust down its goal to reflect the current situation.”
Arkhom said his ministry would continue to monitor the situation closely to accurately evaluate the extent of the impact on different sectors of the Thai economy, while using inputs from relevant agencies.
The finance minister also said the Oil Fund may have to borrow up to 40 billion baht from the original 20 billion baht limit allowed by the Cabinet to subsidise the cap on the diesel price at not over 30 baht per litre, while keeping the prices of benzene and cooking gas from rising too high.
“If the cabinet allows an increase in the borrowing limit to 40 billion baht, we believe we can continue our subsidies until the end of May this year, provided the price of oil on the global market does not exceed $130 dollar per barrel,” he said.
