India's biggest oil find in decades is now on stream but the country, with its rapidly growing economy, will still be one of the hungriest consumers of foreign crude, analysts say.
Prime Minister Manmohan Singh turned on the tap at the weekend to start crude gushing from British exploration company Cairn Energy's remote oil field in western Rajasthan state.
"We dedicate this oil to the nation,"declared Rahul Dhir, head of Cairn's India unit, at the ceremony that underscored the importance the country attaches to energy security to drive economic growth.
Cairn surprised the world in 2004 with the discovery of the Barmer field in an area written off by Anglo-Dutch giant Shell.
The field contains some 3.5 billion barrels of oil of which it is technically feasible to recover at least one billion barrels.
Edinburgh-based Cairn expects the discovery, which lifted it from relative obscurity into the FTSE-100 index of Britain's leading companies, to raise India's oil output by at least 20% based on current production.
The oil fields will cut India's oil import bill by 7% or $6.8 billion.
But the increased production, expected to come fully on stream in 2011, will come nowhere near to plugging the crude supply gap in Asia's third-largest economy, analysts say.
"As India's economy grows, the country is only going to need more oil," said Deepak Pareek, energy analyst at Angel Broking."The Cairn find is a step in the right direction but as demand keeps growing we need to make more similar discoveries to make us more selfsufficient."
The nation of nearly 1.2 billion people already imports 70% of its oil needs and experts believe that figure will hit 90%by 2030.
India's fuel thirst has shot up as rising incomes have spurred industrial demand and more people buy energy-guzzling cars and appliances.
Economic expansion has slipped back to around 6% due to the worldwide slump, but the government hopes to steer the country back to its previous nine percent growth trajectory as soon as the global economy picks up.
Already among the world's top 10 oil importers, India is expected to become the world's fourth-largest by 2025, according to US government data.
Oil nowmakes up 31% of India's energy consumption while coal supplies over 50%. Natural gas furnishes about 8% of India's energy needs.
India's government has made energy security one of its national priorities, as it is unwilling for the country's economic prospects to be dependent on the vagaries of the foreign crude market and sometimes unstable political regions.
It presented its recent landmark nuclear deal with the United States, which ended its atomic pariah status and gave it access to civilian technology, as a step towards that goal.
It is also seeking to develop other energy sources such as wind and solar power and has become, along with China,one of the world's most aggressive seekers of foreign oil and gas properties.
But experts say it will take years for alternate energy forms to have any significant role in supplying India's fuel needs.
Monday, August 31, 2009
A family feud that is threatening Asia's energy needs
As the global economy gets back on track after a prolonged period of instability and uncertainty, demand for energy is set to explode, particularly in Asia's export-driven economies. This presents challenges for Asia, and particularly countries such as Thailand.Stable and reliable sources of energy are the lifeblood of thriving economies.Asia would do well to ensure that its regional supplies are secure and attractive to investors.
Consider Thailand, whose hunger for natural gas is immense, with imports doubling since 2004. Thailand imported 9.8 trillion cubic metres of natural gas in 2007(the latest available numbers)making it the 5th largest importer within Asia. This represents a 30% increase from 2006. And those import demands are rising still more.
The demand for energy by Asia is so pronounced it has prompted some nations to seek complex energy deals in volatile and unsavory regions of the world, particularly resource-rich nations in Africa and the Middle East. This is not a sustainable or advisable strategy for the long term.
Instead, it is important that Asian nations maximise the resources in their own backyards. North Asian countries such as Mongolia are trying to develop more of their geological endowments.And India holds great potential to emerge as a major Asian energy force, provided it can overcome some of the short-sighted views of its business oligarchs.
India could be a major source of gas for the broader Asian market, including Thailand. A huge gas discovery in India's massive Krishna Godavari basin could well transform the country and the region.
The development and production of gas from this field, made possible with an investment of about US$6.5 billion (220 billion baht), is India's first. It is also one of the world's most complex deep-water fields - with the gas lying 3,000m under the sea bed in extreme weather conditions - and was completed in a record time of less than seven years from discovery.
There are very few gas fields of such depth and complexity in the world which have reached the stage of production.Already in less than six months of its life, it is producing 36 mmscmd (million metric standard cubic metres per day)of gas, which is an achievement with few parallels in the global E&P industry.At full capacity this field holds the potential to satisfy many of India's and the region's increasing gas needs. And there are other areas of India, such as throughout the Bay of Bengal, that are ripe for exploration.
But business bickering in Mumbai threatens the expansion of the Indian sources. Two of the world's wealthiest men, the Ambani brothers, Mukesh and Anil, have locked horns in a battle over the price and distribution of Indian gas.If Indian gas development gets bogged down in a family feud, it will undermine Asia's broader energy needs.
Here is what has happened. The Ambani brothers control the legacy assets of Reliance Industries, the highly successful industrial conglomerate built by their late father. Mr Mukesh controls the gas that can be developed in the Krishna Godavari basin, the market price of which is set at $4.20 per MMBTU (million British thermal units).
Mr Anil is suing his brother, demanding he hand over gas supplies at roughly half the market price. The reason? A family agreement, brokered years ago by Mr Mukesh and Mr Anil's mother,stipulates that Mr Mukesh hand over gas to his brother to power his electricity business at below-market rates.
There are two major problems with Mr Anil's demands.
The first is the power plants to be fired by the gas don't exist - Mr Anil hasn't built them. So he is demanding gas his company can't use.
The second reason is Indian law. The Indian government has developed a sensible policy to encourage the distribution of its gas. Its gas utilisation policy stipulates that gas "consumers should be in a position to actually consume gas as and when it becomes available". These measures are to prevent the development of excessive reserves and gas hoarding.
Handing gas over to Mr Anil at half the market price so he can simply resell it on the market adds no value to Indian consumers or to Indian public coffers.And it does nothing to help long-term energy investment in India which is vital to meeting Asia's rising energy needs.Indeed, the legal uncertainty spooks investors who wonder why they want to plough capital into a market plagued by such nonsense.
It should be embarrassing that a country as strategically important as India has its energy future held hostage by the petty manoeuvrings of one of its richest men.
The good news is the Indian Supreme Court has agreed to hear the case, something it will do tomorrow. One reason for having an independent judiciary is so that an impartial bench can weigh the interests of an entire people to make sure those interests are not trampled by the narrow interests of a powerful few.
The Indian Supreme Court can send a powerful message to global energy investors next week - that the old way of doing business in which family ties take precedence over markets and the public interest is over, and that a modern India is a safe place to invest. This will be a victory for India, for Asia, and for a thriving Asian economic region.
The author is a global energy consultant who worked for 25 years with Unocal, an international oil and gas company, which made the first gas discovery in Thailand.
Consider Thailand, whose hunger for natural gas is immense, with imports doubling since 2004. Thailand imported 9.8 trillion cubic metres of natural gas in 2007(the latest available numbers)making it the 5th largest importer within Asia. This represents a 30% increase from 2006. And those import demands are rising still more.
The demand for energy by Asia is so pronounced it has prompted some nations to seek complex energy deals in volatile and unsavory regions of the world, particularly resource-rich nations in Africa and the Middle East. This is not a sustainable or advisable strategy for the long term.
Instead, it is important that Asian nations maximise the resources in their own backyards. North Asian countries such as Mongolia are trying to develop more of their geological endowments.And India holds great potential to emerge as a major Asian energy force, provided it can overcome some of the short-sighted views of its business oligarchs.
India could be a major source of gas for the broader Asian market, including Thailand. A huge gas discovery in India's massive Krishna Godavari basin could well transform the country and the region.
The development and production of gas from this field, made possible with an investment of about US$6.5 billion (220 billion baht), is India's first. It is also one of the world's most complex deep-water fields - with the gas lying 3,000m under the sea bed in extreme weather conditions - and was completed in a record time of less than seven years from discovery.
There are very few gas fields of such depth and complexity in the world which have reached the stage of production.Already in less than six months of its life, it is producing 36 mmscmd (million metric standard cubic metres per day)of gas, which is an achievement with few parallels in the global E&P industry.At full capacity this field holds the potential to satisfy many of India's and the region's increasing gas needs. And there are other areas of India, such as throughout the Bay of Bengal, that are ripe for exploration.
But business bickering in Mumbai threatens the expansion of the Indian sources. Two of the world's wealthiest men, the Ambani brothers, Mukesh and Anil, have locked horns in a battle over the price and distribution of Indian gas.If Indian gas development gets bogged down in a family feud, it will undermine Asia's broader energy needs.
Here is what has happened. The Ambani brothers control the legacy assets of Reliance Industries, the highly successful industrial conglomerate built by their late father. Mr Mukesh controls the gas that can be developed in the Krishna Godavari basin, the market price of which is set at $4.20 per MMBTU (million British thermal units).
Mr Anil is suing his brother, demanding he hand over gas supplies at roughly half the market price. The reason? A family agreement, brokered years ago by Mr Mukesh and Mr Anil's mother,stipulates that Mr Mukesh hand over gas to his brother to power his electricity business at below-market rates.
There are two major problems with Mr Anil's demands.
The first is the power plants to be fired by the gas don't exist - Mr Anil hasn't built them. So he is demanding gas his company can't use.
The second reason is Indian law. The Indian government has developed a sensible policy to encourage the distribution of its gas. Its gas utilisation policy stipulates that gas "consumers should be in a position to actually consume gas as and when it becomes available". These measures are to prevent the development of excessive reserves and gas hoarding.
Handing gas over to Mr Anil at half the market price so he can simply resell it on the market adds no value to Indian consumers or to Indian public coffers.And it does nothing to help long-term energy investment in India which is vital to meeting Asia's rising energy needs.Indeed, the legal uncertainty spooks investors who wonder why they want to plough capital into a market plagued by such nonsense.
It should be embarrassing that a country as strategically important as India has its energy future held hostage by the petty manoeuvrings of one of its richest men.
The good news is the Indian Supreme Court has agreed to hear the case, something it will do tomorrow. One reason for having an independent judiciary is so that an impartial bench can weigh the interests of an entire people to make sure those interests are not trampled by the narrow interests of a powerful few.
The Indian Supreme Court can send a powerful message to global energy investors next week - that the old way of doing business in which family ties take precedence over markets and the public interest is over, and that a modern India is a safe place to invest. This will be a victory for India, for Asia, and for a thriving Asian economic region.
The author is a global energy consultant who worked for 25 years with Unocal, an international oil and gas company, which made the first gas discovery in Thailand.
Friday, August 28, 2009
BCP aims to lift foreign limit
Bangchak Petroleum Plc (BCP) will propose extending its foreign shareholding limit to 20% from 10% now to facilitate conversions by holders of the company's depository receipts.
Patiparn Sukorndhaman, a senior executive vice-president, said the company would propose that shareholders approve the amendment to its articles of association on Sept 24.
"Extending the foreign limit will increase our trading liquidity and appeal in the market," he said. The higher limit will ease share conversions by holders of Bangchak-DR1 depository receipts.
Bangchak executives also told investors yesterday that an employee joint investment programme would belaunched on Oct 1. Employees may allocate up to 5% of their monthly salaries to invest in Bangchak stock, with Bangchak matching contributions of up to 7.5% of each member's salary. The funds will in turn be invested in Bangchak common stock or depository receipts.
Up to 900 employees are expected to join the programme.
Bangchak also plans to invest 4-5 billion baht in new ventures over the next five years, including natural resources,upstream petrochemicals and logistics,he said. It hopes the new businesses will eventually contribute up to 30% of total revenue and reduce the company's sensitivity to oil price fluctuations.
While the new business ventures would be financed from internal cash flow, Bangchak would continue to look for opportunities to raise funds from the bond market, said Mr Patiparn.
"Last year, we were rated BBB+ by Tris Ratings. We will be re-rated again once the PQI project is done," he said.
The $378-million product quality improvement (PQI) project will help convert fuel oil into higher-value products, and lift Bangchak's refining capacity from 80,000 barrels per day to 100,000 by the end of the year.
BCP shares closed yesterday on the SET at 14.4 baht, up 10 satang, in trade worth 102.38 million baht.
Patiparn Sukorndhaman, a senior executive vice-president, said the company would propose that shareholders approve the amendment to its articles of association on Sept 24.
"Extending the foreign limit will increase our trading liquidity and appeal in the market," he said. The higher limit will ease share conversions by holders of Bangchak-DR1 depository receipts.
Bangchak executives also told investors yesterday that an employee joint investment programme would belaunched on Oct 1. Employees may allocate up to 5% of their monthly salaries to invest in Bangchak stock, with Bangchak matching contributions of up to 7.5% of each member's salary. The funds will in turn be invested in Bangchak common stock or depository receipts.
Up to 900 employees are expected to join the programme.
Bangchak also plans to invest 4-5 billion baht in new ventures over the next five years, including natural resources,upstream petrochemicals and logistics,he said. It hopes the new businesses will eventually contribute up to 30% of total revenue and reduce the company's sensitivity to oil price fluctuations.
While the new business ventures would be financed from internal cash flow, Bangchak would continue to look for opportunities to raise funds from the bond market, said Mr Patiparn.
"Last year, we were rated BBB+ by Tris Ratings. We will be re-rated again once the PQI project is done," he said.
The $378-million product quality improvement (PQI) project will help convert fuel oil into higher-value products, and lift Bangchak's refining capacity from 80,000 barrels per day to 100,000 by the end of the year.
BCP shares closed yesterday on the SET at 14.4 baht, up 10 satang, in trade worth 102.38 million baht.
Oil prices hover near $73 in Asia as Wall Street reverses
Oil prices rose moderately yesterday in Asia, hovering near $73, extending the previous days ra lly as the market was buoyed by a strong perfor mance on Wall Street and a weakening US dollar.
Benchmark crude for October delivery was up 32 cents to $72.81 a barrel by late morning Bangkok time in electronic trading on the New York Mercantile Exchange. The contract Thursday added $1.06 to settle at $72.49 after tumbling from near $75 earlier in the week.
Reflecting the dire state of energy demand, natural gas prices slumped to their lowest level in seven years Thursday after the US government reported that salt caverns, aquifers and other underground areas where it is stored are filling up. Levels of natural gas have been building because power-intense industries like manufacturing have cut back severely on production.
Crude posted gains because of a fall in the dollar which means investors can get more crude for less money.
Yet some analysts say the oil price is bound to fall in coming weeks as earlier euphoria about the global economy emerging from recession gives way to doubts about how sustainable the recovery is. Existing weakness in demand will also be exacerbated by the seasonal drop in gasoline consumption when the US summer dr iving season ends in a few weeks time.
We have seen this strength (in the oil price) which reflected renewed confidence in the economy, said John Vautrain, energy analyst at consultancy Purvin & Gertz in Singapore. But in the last week or so people are starting to say that the stock market is overbought and the data is not that good.
In other Nymex trading, gasoline for September delivery was up 0.46 cent at $2.036 a gallon and heating oil rose 0.2 cent to $1.8612 a gallon.
In London, Brent crude was up 17 cents at $72.50.
Wall Stre ets blue-chip Dow Jones Industrial Average rose 0.39% to 9,580.63 points, ending higher for an eighth straight session and extending its longest winning streak in 28 months.
There were also gains on the techheavy Nasdaq and the Standard & Poors 500 index. Oil got support from a weaker dollar, which makes dollar-priced crude cheaper for buyers using stronger currencies and therefore tends to stimulate dem and and lift prices.
The New York contract jumped to $75 on Tuesday for the first time in 10 months after strong US consumer confidence data, but fell back on profit-taking after failing to break through that key barrier.
Oil lost more ground on Wednesday after official data showed a surprise jump in crude inventories in the United States,the worlds biggest energy consuming nation.
Benchmark crude for October delivery was up 32 cents to $72.81 a barrel by late morning Bangkok time in electronic trading on the New York Mercantile Exchange. The contract Thursday added $1.06 to settle at $72.49 after tumbling from near $75 earlier in the week.
Reflecting the dire state of energy demand, natural gas prices slumped to their lowest level in seven years Thursday after the US government reported that salt caverns, aquifers and other underground areas where it is stored are filling up. Levels of natural gas have been building because power-intense industries like manufacturing have cut back severely on production.
Crude posted gains because of a fall in the dollar which means investors can get more crude for less money.
Yet some analysts say the oil price is bound to fall in coming weeks as earlier euphoria about the global economy emerging from recession gives way to doubts about how sustainable the recovery is. Existing weakness in demand will also be exacerbated by the seasonal drop in gasoline consumption when the US summer dr iving season ends in a few weeks time.
We have seen this strength (in the oil price) which reflected renewed confidence in the economy, said John Vautrain, energy analyst at consultancy Purvin & Gertz in Singapore. But in the last week or so people are starting to say that the stock market is overbought and the data is not that good.
In other Nymex trading, gasoline for September delivery was up 0.46 cent at $2.036 a gallon and heating oil rose 0.2 cent to $1.8612 a gallon.
In London, Brent crude was up 17 cents at $72.50.
Wall Stre ets blue-chip Dow Jones Industrial Average rose 0.39% to 9,580.63 points, ending higher for an eighth straight session and extending its longest winning streak in 28 months.
There were also gains on the techheavy Nasdaq and the Standard & Poors 500 index. Oil got support from a weaker dollar, which makes dollar-priced crude cheaper for buyers using stronger currencies and therefore tends to stimulate dem and and lift prices.
The New York contract jumped to $75 on Tuesday for the first time in 10 months after strong US consumer confidence data, but fell back on profit-taking after failing to break through that key barrier.
Oil lost more ground on Wednesday after official data showed a surprise jump in crude inventories in the United States,the worlds biggest energy consuming nation.
LUKOIL"S PROFIT FALLS 56% AS FUEL PRICES DIP
Russia's largest private oil firm, Lukoil, yesterday said its profits plunged 56 per cent in the first half amid plummeting crude prices.
Net profits fell to US$3.2 billion (Bt109 billion)from $7.29 billion in the first half of 2008, the Moscow-based firm said in a statement. Sales fell 39 per cent to $34.9 billion.
For the second quarter alone, Lukoil reported profits down 44 per cent at $2.32 billion, with sale tumbling 37 per cent to $20.1 billion.
Lukoil, Russia's second-largest oil producer, has been hard hit by the dive in oil proces, which are now hovering around $70 per barrel compared to record highs above $147 last year.
Analysts polled by Dow Jones Newswires had forcast a $1.76-billion net profit for the second quarter.
"Measures to increase the effectiveness of our activity put in place at the start of the year have allowed us to successfully overcome the difficult macroeconomic situation and preserve a positive cash-flow," Lukoil said.
Lukoil is 20-per-cent owned by US oil giant ConocoPhillips.
Net profits fell to US$3.2 billion (Bt109 billion)from $7.29 billion in the first half of 2008, the Moscow-based firm said in a statement. Sales fell 39 per cent to $34.9 billion.
For the second quarter alone, Lukoil reported profits down 44 per cent at $2.32 billion, with sale tumbling 37 per cent to $20.1 billion.
Lukoil, Russia's second-largest oil producer, has been hard hit by the dive in oil proces, which are now hovering around $70 per barrel compared to record highs above $147 last year.
Analysts polled by Dow Jones Newswires had forcast a $1.76-billion net profit for the second quarter.
"Measures to increase the effectiveness of our activity put in place at the start of the year have allowed us to successfully overcome the difficult macroeconomic situation and preserve a positive cash-flow," Lukoil said.
Lukoil is 20-per-cent owned by US oil giant ConocoPhillips.
Thursday, August 27, 2009
Incentives reviewed to attract HQs
The government is reviewing investment incentives to make Thailand more attractive as a location for regional headquarters than its neighbours.
Prime Minister Abhisit Vejjajiva announced the initiative - without providing details of new privileges - while presiding over ExxonMobil's celebration of the sixth anniversary of its Bangkok Business Support Centre.
The unit runs the oil group's administrative functions such as payroll, training and retail business support for AsiaPacific. The centre's staff have increased over six years from 600 to 2,000.
ExxonMobil was the first company to gain Board of Investment (BoI) privileges under the regional operating service (ROS) establishment scheme, which assists with work permits and import duty on machinery.
Hiranya Suchinai, an adviser to the BoI, hopes to see more companies being attracted by enhanced privileges to build their regional centres in Thailand.
Last year,20 projects worth 1.06 billion baht sought privileges to set up regional offices here. In the first seven months of 2009, BoI has received nine requests with a value of 161 million baht.
Daniel Lyons, chairman of the board of directors, said ExxonMobil had chosen Bangkok for its backup office for business in Southeast Asia because of the country's infrastructure and the company's long experience of operating here.
But the company has no plans to expand its business in Thailand, largely because Esso (Thailand) Plc, Exxon's Thai unit, is unsure of the outlook for the oil refinery and petrochemical industry in the second half of the year, he said.
"Oil stock gains in the first half helped us [to improve results], but in the latter half, with the global economic recovery outlook being gloomy, we are uncertain of the business direction and unable to estimate," said Mongkonnimit Ueachoetkun, public relations manager for Esso Thailand.
Shares of ESSO closed yesterday on the Stock Exchange of Thailand at 7.35 baht, down 20 satang, in trade worth 105.65 million baht.
Prime Minister Abhisit Vejjajiva announced the initiative - without providing details of new privileges - while presiding over ExxonMobil's celebration of the sixth anniversary of its Bangkok Business Support Centre.
The unit runs the oil group's administrative functions such as payroll, training and retail business support for AsiaPacific. The centre's staff have increased over six years from 600 to 2,000.
ExxonMobil was the first company to gain Board of Investment (BoI) privileges under the regional operating service (ROS) establishment scheme, which assists with work permits and import duty on machinery.
Hiranya Suchinai, an adviser to the BoI, hopes to see more companies being attracted by enhanced privileges to build their regional centres in Thailand.
Last year,20 projects worth 1.06 billion baht sought privileges to set up regional offices here. In the first seven months of 2009, BoI has received nine requests with a value of 161 million baht.
Daniel Lyons, chairman of the board of directors, said ExxonMobil had chosen Bangkok for its backup office for business in Southeast Asia because of the country's infrastructure and the company's long experience of operating here.
But the company has no plans to expand its business in Thailand, largely because Esso (Thailand) Plc, Exxon's Thai unit, is unsure of the outlook for the oil refinery and petrochemical industry in the second half of the year, he said.
"Oil stock gains in the first half helped us [to improve results], but in the latter half, with the global economic recovery outlook being gloomy, we are uncertain of the business direction and unable to estimate," said Mongkonnimit Ueachoetkun, public relations manager for Esso Thailand.
Shares of ESSO closed yesterday on the Stock Exchange of Thailand at 7.35 baht, down 20 satang, in trade worth 105.65 million baht.
Bangchak to invest up to Bt4 billion in non-oil business
Bangchak Petroleum plans to invest Bt3 billion to Bt4 billion over the next three years in non-oil businesses, such as natural resources and logistics.
Patiparn Sukorndhaman, senior executive vice president for accounting and finance, yesterday said Bangchak could decide to take over companies or invest in the establishment of new ones.
The investment models are under study, and the company is in talks with prospective targets.
"We'll finance the investment through cash flow. We have enough cash for this. Our policy is we won't borrow to finance the investment in new business areas," Patiparn said. "A clearer picture of the new businesses should be available in the next quarter."
Bangchak hopes the new business areas will account for 30 per cent of earnings before interest, taxes, depreciation and amortisation (ebitda) over the next five years.
Meanwhile, in the oil business, Bangchak plans to spend about US$30 million (Bt1 billion) on upgrading the quality of its petrol to meet the Euro-IV standard next year. The amount is not included in the company's annual investment budget of Bt700 million.
Bangchak's diesel products already comply with the standard.
Patiparn said the company's ebitda this year would likely reach Bt10 billion if global oil prices remained around $70 per barrel. It also estimates the base gross refining margin, including hedging, to stay at $10 per barrel in the second half based on the oil-price estimate.
Bangchak earlier targeted ebitda of Bt8 billion this year.
"I believe global oil prices will not swing sharply in the second half, due to the world economic sentiment. So, Bangchak's ebitda will possibly reach Bt10 billion this year," he added.
He said Bangchak would resume its Product Quality Improvement project next month after shutting down the hydrocracking unit, a part of the project, in May.
After the resumption, the company will increase its refining capacity to 100,000 barrels per day in the fourth quarter, while full-year capacity on average could be 89,000bpd.
Patiparn Sukorndhaman, senior executive vice president for accounting and finance, yesterday said Bangchak could decide to take over companies or invest in the establishment of new ones.
The investment models are under study, and the company is in talks with prospective targets.
"We'll finance the investment through cash flow. We have enough cash for this. Our policy is we won't borrow to finance the investment in new business areas," Patiparn said. "A clearer picture of the new businesses should be available in the next quarter."
Bangchak hopes the new business areas will account for 30 per cent of earnings before interest, taxes, depreciation and amortisation (ebitda) over the next five years.
Meanwhile, in the oil business, Bangchak plans to spend about US$30 million (Bt1 billion) on upgrading the quality of its petrol to meet the Euro-IV standard next year. The amount is not included in the company's annual investment budget of Bt700 million.
Bangchak's diesel products already comply with the standard.
Patiparn said the company's ebitda this year would likely reach Bt10 billion if global oil prices remained around $70 per barrel. It also estimates the base gross refining margin, including hedging, to stay at $10 per barrel in the second half based on the oil-price estimate.
Bangchak earlier targeted ebitda of Bt8 billion this year.
"I believe global oil prices will not swing sharply in the second half, due to the world economic sentiment. So, Bangchak's ebitda will possibly reach Bt10 billion this year," he added.
He said Bangchak would resume its Product Quality Improvement project next month after shutting down the hydrocracking unit, a part of the project, in May.
After the resumption, the company will increase its refining capacity to 100,000 barrels per day in the fourth quarter, while full-year capacity on average could be 89,000bpd.
Wednesday, August 26, 2009
Looking to fill the generation gap
Bas, a Grade-12 student from Bangkok, has a dream to establish a green guesthouse with a "vertical garden".Dew, from northern Thailand, plans to set up separate bins for recyclable materials at his Assumption Lampang School.
Tiffany, a high school girl from the US,is thinking seriously about how much energy she uses in her everyday life, and Piotr, from Poland, considers, for the first time, the pros and cons of nuclear energy.
These children come from different parts of the world, with different backgrounds and cultures. But they are now sharing the same goal - to help save energy and improve the global environment.
Their inspiration was participating in the Toshiba Youth Conference for a Sustainable Future 2009, held between Aug 1 and Aug 7 in Kamogawa and Yokohama,Japan.
Hosted by the Toshiba International Foundation, the conference brought together 27 high school students and 10 teachers from Thailand, the US, Poland and Japan to explore ways to achieve a sustainable society by focusing on not only energy conservation, but also sustainable energy resources.
With its theme to halve CO2 emissions by 2050, the week-long conference encouraged the young participants to think about how they could introduce new energy practices to their own towns and communities, what would be the best mix of energy resources and what they could do individually to achieve a sustainable energy society. Discussions were also held on the shift from oil- and coal-based energy to that of natural gas and nuclear power.
Fumihiko Namekawa, president of the Toshiba International Foundation, explained that the programme mainly involved younger people because children are the future.
"Children are a large part of society that can make things happen or not happen.If they don't get started, nobody will. In 20 or 30 years, today's children will hold important positions in organisations and society. If we implant the right attitudes now, in the future they may come up with environmental-friendly policies or projects for their communities," he said.
He said the idea of an environmental camp was developed because the issues are still not being addressed by the younger generation. High school students are the target because this kind of programme is still rare for them.
This year's conference was only the second.Last year, the focus was on energy consumption, this year it was energy supply. In coming years the foundation hopes to address other environmental issues such as global warming,water safety, air pollution and food safety.
The sustainable programme for a sustainable society
Mr Namekawa said the conference itself is sustainable. The same schools will be chosen to participate for three consecutive years,during which time the teachers will remain the same, while students take turns each year to attend. Selected schools will be consistently engaged in environmental activities.
"The conference is just a one week camp,but afterwards we expect the children to educate their communities," Mr Namekawa said."The first three years are like pilot projects during which we will try various methods and options. After three youth conferences,we want to establish standard ways to implement this programme for 10 or 30 years and beyond."
Getting all the kids involved
Designed and operated by BeGood Cafe, a Japanese non-profit organisation working on environmental issues, the conference got all participants to have their say despite their different cultures and backgrounds.
The American and Polish kids are more confident and outspoken, while the Thai and Japanese students are quieter, and having language barriers to overcome.
However, all of them could finally communicate thanks to the four camp rules - speak out, respect others, be active and be creative.
Before the conference, students were given pre-camp assignments to investigate environmental problems in their own communities and share their knowledge on the designated website, act-eco.net, in order to build common understanding with other participants.
The camp kicked off at Josai Awa Kamogawa Learning Centre in Chiba, surrounded by mountains and sea, to allow the children a chance to be close to nature. After some team-building activities to help the students overcome cultural and language barriers, participants were engaged in discussions to find common perspectives and identify goals in which they can work together.
The crucial part of the programme is exercises for students to conduct interviews and research as journalists. The end product was a newspaper called Act Eco Journal , where students worked in groups to write articles about their findings and opinions towards each camp activity.
After returning to their home countries,the students had post-camp assignments to share their experiences with others. They were to take some concrete action in their own communities and share their achievements with other participants via the website in order to continue to learn from each other.
The lessons learned
The programme offered many highlights that captured the students' attention.
Starting with the camp routines, there was a rule restricting participants to take a bath only once a day to save water. And each student was given chopsticks which they were told to carry to use for every meal.There was one evening where they experienced dinner with light from a solar lantern.
The visits to some ecological communities and interviews with Japanese people who chose to live a sustainable life outside the city taught the children about the true happiness of living a simple life.
The young participants were impressed by a man, Mr Hayashi, who lives in a home made of natural and local materials, and another man called Mr Yoshida who quit his busy, urban life to live in a self-sustaining community. Both men do not own television sets and also grow their own vegetables.
"It requires time and great effort to live a sustainable life. It's not something everyone can do, and I feel that their courage to live such an extreme lifestyle is remarkable,"said Songyi Ee, from the US High School for Environmental Studies.
Yestrial Henriquez, from the same school,said the programme inspired her to think of adjusting her own lifestyle.
"Something happening in the US could affect the other side of the world. The best solution is to start off small, beginning with ourselves, to make a change," she said.
In another visit to a Mizuta residence, a traditional Japanese home built using natural sources such as wood, earth and bamboo,the students learned about the traditional wisdom that provides solutions for problems Japanese people faced.
For example, the wooden pillars helped see the house through many earthquakes,and the roof made of grass protected the home from heat, rain and cold.
A study tour to the Toshiba Science Museum showed the company's continuous effort to develop sustainable technology, such as erasable ink, the replacement of old incandescent bulbs with LED ones, and a new battery called a "Direct Methanol Cell"that lasts for 20 hours with less energy loss.
Wiphada Det-Amnatkul, the Thai delegate from Triam Udom Suksa School, said she was very much impressed with the erasable ink, which allows paper to be reused.
"Homes and offices use and throw away tonnes of paper every day. But this ink, which disappeared when it was heated, offered a better solution than just recycling the paper,"she said.
Another group tour to Isogo Nuclear Engineering Centre, meanwhile, introduced nuclear energy as an alternative source of energy to replace fossil fuels.
Though agreeing that nuclear is the most realistic solution for the current energy crisis,many young participants questioned the safety of collecting and disposing of nuclear waste.
"If our technology is well developed to tackle those hazardous wastes, maybe we can make full use of nuclear energy," said Naoki Matsumoto, from Waseda University Senior High School, Japan.
As for how to achieve a sustainable future,one group of participants wrote in their Act Eco Journal :"A mix of energy sources solar, wind, geothermal and nuclear energies,is the only way to go."Having only the solar,we would be helpless on a cloudy day or in the night. The wind turbines won't work in a windless area, and geothermal energy is restricted only to few areas. The path we should follow is mixing those energies together. They all should be used in a terrain and climate that is the best fit for each one."
Tiffany, a high school girl from the US,is thinking seriously about how much energy she uses in her everyday life, and Piotr, from Poland, considers, for the first time, the pros and cons of nuclear energy.
These children come from different parts of the world, with different backgrounds and cultures. But they are now sharing the same goal - to help save energy and improve the global environment.
Their inspiration was participating in the Toshiba Youth Conference for a Sustainable Future 2009, held between Aug 1 and Aug 7 in Kamogawa and Yokohama,Japan.
Hosted by the Toshiba International Foundation, the conference brought together 27 high school students and 10 teachers from Thailand, the US, Poland and Japan to explore ways to achieve a sustainable society by focusing on not only energy conservation, but also sustainable energy resources.
With its theme to halve CO2 emissions by 2050, the week-long conference encouraged the young participants to think about how they could introduce new energy practices to their own towns and communities, what would be the best mix of energy resources and what they could do individually to achieve a sustainable energy society. Discussions were also held on the shift from oil- and coal-based energy to that of natural gas and nuclear power.
Fumihiko Namekawa, president of the Toshiba International Foundation, explained that the programme mainly involved younger people because children are the future.
"Children are a large part of society that can make things happen or not happen.If they don't get started, nobody will. In 20 or 30 years, today's children will hold important positions in organisations and society. If we implant the right attitudes now, in the future they may come up with environmental-friendly policies or projects for their communities," he said.
He said the idea of an environmental camp was developed because the issues are still not being addressed by the younger generation. High school students are the target because this kind of programme is still rare for them.
This year's conference was only the second.Last year, the focus was on energy consumption, this year it was energy supply. In coming years the foundation hopes to address other environmental issues such as global warming,water safety, air pollution and food safety.
The sustainable programme for a sustainable society
Mr Namekawa said the conference itself is sustainable. The same schools will be chosen to participate for three consecutive years,during which time the teachers will remain the same, while students take turns each year to attend. Selected schools will be consistently engaged in environmental activities.
"The conference is just a one week camp,but afterwards we expect the children to educate their communities," Mr Namekawa said."The first three years are like pilot projects during which we will try various methods and options. After three youth conferences,we want to establish standard ways to implement this programme for 10 or 30 years and beyond."
Getting all the kids involved
Designed and operated by BeGood Cafe, a Japanese non-profit organisation working on environmental issues, the conference got all participants to have their say despite their different cultures and backgrounds.
The American and Polish kids are more confident and outspoken, while the Thai and Japanese students are quieter, and having language barriers to overcome.
However, all of them could finally communicate thanks to the four camp rules - speak out, respect others, be active and be creative.
Before the conference, students were given pre-camp assignments to investigate environmental problems in their own communities and share their knowledge on the designated website, act-eco.net, in order to build common understanding with other participants.
The camp kicked off at Josai Awa Kamogawa Learning Centre in Chiba, surrounded by mountains and sea, to allow the children a chance to be close to nature. After some team-building activities to help the students overcome cultural and language barriers, participants were engaged in discussions to find common perspectives and identify goals in which they can work together.
The crucial part of the programme is exercises for students to conduct interviews and research as journalists. The end product was a newspaper called Act Eco Journal , where students worked in groups to write articles about their findings and opinions towards each camp activity.
After returning to their home countries,the students had post-camp assignments to share their experiences with others. They were to take some concrete action in their own communities and share their achievements with other participants via the website in order to continue to learn from each other.
The lessons learned
The programme offered many highlights that captured the students' attention.
Starting with the camp routines, there was a rule restricting participants to take a bath only once a day to save water. And each student was given chopsticks which they were told to carry to use for every meal.There was one evening where they experienced dinner with light from a solar lantern.
The visits to some ecological communities and interviews with Japanese people who chose to live a sustainable life outside the city taught the children about the true happiness of living a simple life.
The young participants were impressed by a man, Mr Hayashi, who lives in a home made of natural and local materials, and another man called Mr Yoshida who quit his busy, urban life to live in a self-sustaining community. Both men do not own television sets and also grow their own vegetables.
"It requires time and great effort to live a sustainable life. It's not something everyone can do, and I feel that their courage to live such an extreme lifestyle is remarkable,"said Songyi Ee, from the US High School for Environmental Studies.
Yestrial Henriquez, from the same school,said the programme inspired her to think of adjusting her own lifestyle.
"Something happening in the US could affect the other side of the world. The best solution is to start off small, beginning with ourselves, to make a change," she said.
In another visit to a Mizuta residence, a traditional Japanese home built using natural sources such as wood, earth and bamboo,the students learned about the traditional wisdom that provides solutions for problems Japanese people faced.
For example, the wooden pillars helped see the house through many earthquakes,and the roof made of grass protected the home from heat, rain and cold.
A study tour to the Toshiba Science Museum showed the company's continuous effort to develop sustainable technology, such as erasable ink, the replacement of old incandescent bulbs with LED ones, and a new battery called a "Direct Methanol Cell"that lasts for 20 hours with less energy loss.
Wiphada Det-Amnatkul, the Thai delegate from Triam Udom Suksa School, said she was very much impressed with the erasable ink, which allows paper to be reused.
"Homes and offices use and throw away tonnes of paper every day. But this ink, which disappeared when it was heated, offered a better solution than just recycling the paper,"she said.
Another group tour to Isogo Nuclear Engineering Centre, meanwhile, introduced nuclear energy as an alternative source of energy to replace fossil fuels.
Though agreeing that nuclear is the most realistic solution for the current energy crisis,many young participants questioned the safety of collecting and disposing of nuclear waste.
"If our technology is well developed to tackle those hazardous wastes, maybe we can make full use of nuclear energy," said Naoki Matsumoto, from Waseda University Senior High School, Japan.
As for how to achieve a sustainable future,one group of participants wrote in their Act Eco Journal :"A mix of energy sources solar, wind, geothermal and nuclear energies,is the only way to go."Having only the solar,we would be helpless on a cloudy day or in the night. The wind turbines won't work in a windless area, and geothermal energy is restricted only to few areas. The path we should follow is mixing those energies together. They all should be used in a terrain and climate that is the best fit for each one."
Australia approves massive gas project
Australia yesterday approved a massive energy project that will supply natural gas worth tens of billions of dollars to China and India, giving new impetus to its resources boom.
Environment Minister Peter Garrett imposed 28 conditions to protect wildlife but said he saw no reason to block the Gorgon liquefied natural gas (LNG) plant off Western Australia, allowing it to clear the final regulatory hurdle.
The project is a joint venture by Chevron, Shell and ExxonMobil, which has signed a record US$41-billion (1.4-trillion) contract with Chinese giant PetroChina and another worth $21 billion with India's Petronet.
The Gorgon field, thought to hold more than 40 trillion cubic feet of gas, is expected to create thousands of jobs and pump billions of dollars into Australia's economy.
Chevron, majority partner in the project, welcomed the approval and said a final investment decision would be made within months.
"The Gorgon project is Australia's largest single resource project and is set to deliver significant economic benefits and create around 10,000 indirect and direct jobs during peak construction," said Roy Krzywosinski, the company's Australian managing director.
He said the plant was "globallly and nationally significant, with an economic life of at least 40 years".
Environment Minister Peter Garrett imposed 28 conditions to protect wildlife but said he saw no reason to block the Gorgon liquefied natural gas (LNG) plant off Western Australia, allowing it to clear the final regulatory hurdle.
The project is a joint venture by Chevron, Shell and ExxonMobil, which has signed a record US$41-billion (1.4-trillion) contract with Chinese giant PetroChina and another worth $21 billion with India's Petronet.
The Gorgon field, thought to hold more than 40 trillion cubic feet of gas, is expected to create thousands of jobs and pump billions of dollars into Australia's economy.
Chevron, majority partner in the project, welcomed the approval and said a final investment decision would be made within months.
"The Gorgon project is Australia's largest single resource project and is set to deliver significant economic benefits and create around 10,000 indirect and direct jobs during peak construction," said Roy Krzywosinski, the company's Australian managing director.
He said the plant was "globallly and nationally significant, with an economic life of at least 40 years".
Oil prices hover above $72 in Asia amid demand concerns
Oil prices hovered above $72 a barrel yesterday in Asia after tumbling more than 3% overnight,weighed down by concerns over slowing demand in the United States,the worlds largest energy consumer.
Benchmark crude for October delivery was up 43 cents at $72.48 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.
Prices briefly touched $75 a barrel Tuesday for the first time in 10 months,buoyed by new signals of rising US consumer confidence, but fell back to settle at $72.05 after a new report from Washington projected a cumulative $7 trillion US deficit for the next decade.
New data on weak energy demand added further pressure on pricing.
Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore,said a report by the American Petroleum Institute showed a substantial gain of 4.3 million barrels in crude oil inventories for the week ended Aug 21.
The US Energy Department will release its weekly inventories data yesterday. For the previous week, crude stocks fell 8.4 million barrels, according to that data.
The buildup in stockpiles was largely due to the delivery of crude oil imports that were delayed earlier, and this may further increase due to seasonally lower demand for gasoline as the summer holidays end, he said.
The momentum in the oil rally has certainly been broken. We are seeing a well-deserved correction right now and could see oil prices fall below $70 a barrel in the coming weeks, Shum said.
Energy prices have risen sharply this year, riding on a rally in equity markets mostly on the belief that the global economy is improving and demand will rebound soon.
In other Nymex trading, gasoline for September delivery gained 0.76 cent to $2.0172 a gallon and heating oil added 0.76 cent to $1.8635 a gallon. Natural gas was little changed at $2.881 per 1,000 cubic feet.
In London, Brent crude rose 43 cents to $72.25.
The New York-based Conference Board provided a bit of good news Tuesday when it said its Consumer Confidence index rose to 54.1 from an upwardly revised 47.4 in July. Still, the index is well below 90, the minimum level associated with a healthy economy.
Shum said the pull back in oil pricing was in contrast to gains in stock markets. The Dow Jones industr ial average rose 0.3% Tuesday and most Asian markets advanced yesterday. Oil has often looked to the perfor mance of equities as a gauge of economic optimism and therefore crude demand.
If oil decouples from the linkage with equities and gives in to weak fundamentals, we could see continuos correction in oil pricing, Shum said.
Benchmark crude for October delivery was up 43 cents at $72.48 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.
Prices briefly touched $75 a barrel Tuesday for the first time in 10 months,buoyed by new signals of rising US consumer confidence, but fell back to settle at $72.05 after a new report from Washington projected a cumulative $7 trillion US deficit for the next decade.
New data on weak energy demand added further pressure on pricing.
Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore,said a report by the American Petroleum Institute showed a substantial gain of 4.3 million barrels in crude oil inventories for the week ended Aug 21.
The US Energy Department will release its weekly inventories data yesterday. For the previous week, crude stocks fell 8.4 million barrels, according to that data.
The buildup in stockpiles was largely due to the delivery of crude oil imports that were delayed earlier, and this may further increase due to seasonally lower demand for gasoline as the summer holidays end, he said.
The momentum in the oil rally has certainly been broken. We are seeing a well-deserved correction right now and could see oil prices fall below $70 a barrel in the coming weeks, Shum said.
Energy prices have risen sharply this year, riding on a rally in equity markets mostly on the belief that the global economy is improving and demand will rebound soon.
In other Nymex trading, gasoline for September delivery gained 0.76 cent to $2.0172 a gallon and heating oil added 0.76 cent to $1.8635 a gallon. Natural gas was little changed at $2.881 per 1,000 cubic feet.
In London, Brent crude rose 43 cents to $72.25.
The New York-based Conference Board provided a bit of good news Tuesday when it said its Consumer Confidence index rose to 54.1 from an upwardly revised 47.4 in July. Still, the index is well below 90, the minimum level associated with a healthy economy.
Shum said the pull back in oil pricing was in contrast to gains in stock markets. The Dow Jones industr ial average rose 0.3% Tuesday and most Asian markets advanced yesterday. Oil has often looked to the perfor mance of equities as a gauge of economic optimism and therefore crude demand.
If oil decouples from the linkage with equities and gives in to weak fundamentals, we could see continuos correction in oil pricing, Shum said.
Australia gives massive natural gas project the green light
Australia yesterday approved a massive energy project that will supply natural gas worth tens of billions of dollars to China and India, giving new impetus to its resources boom.
Environment Minister Peter Garrett imposed 28 conditions to protect wildlife but said he saw no reason to block the Gorgon liquefied natural gas (LNG) plant off Western Australia, removing its final regulatory hurdle.
The project is a joint venture by Chevron, Shell and ExxonMobil, which has signed a record US$41 billion contract with Chinese giant PetroChina Co and another worth $21 billion with India's Petronet LNG Ltd.
"I've considered it very carefully, I don't believe that there will be unacceptable (environmental) impacts and,as a consequence of that, I have made my decision today," Garrett said.
The Gorgon field, thought to hold more than 40 trillion cubic feet of gas, is expected to create thousands of jobs and pump billions of dollars into Australia's economy.
Chevron, majority partner in the project, welcomed Garrett's approval and said a final investment decision on the yet-to-be developed plant would be made in the coming months.
"The Gorgon project is Australia's largest single resource project and is set to deliver significant economic benefits and create around 10,000 indirect and direct jobs during peak construction,"said Roy Krzywosinski, the company's Australian managing director.
He said the plant was "globally and nationally significant", with an economic life of at least 40 years, adding it had been sited to minimise environmental impact.
Trade Minister Simon Crean said the deal was a major boost to Australia's profile as a green energy provider and proof China saw it as a key partner in its growth.
"This is a commitment by China to a long-term contract. They see Australia as part of its energy supply, but not just any energy - clean energy," he told reporters."The trade relationship with China continues to grow very strongly.The recent gas deal, there's a huge case in point."
Intense demand from the emerging economies of China and India for resources has underpinned a period of stellar growth for Australia's mining and energy sectors.
Trade with Beijing, the world's largest consumer of iron ore and coal, was worth US$58 billion last year alone.
Australia is the world's seventh-largest exporter of LNG and Chevron said the Gorgon project would secure Australia's position as a leading gas producer and generate a new source of wealth for the resource-rich nation.
According to trade officials, demand for LNG far exceeds supply and it is seen as the oil and gas industry's greatest growth area, particularly as customers look for cleaner energy sources.
Environment Minister Peter Garrett imposed 28 conditions to protect wildlife but said he saw no reason to block the Gorgon liquefied natural gas (LNG) plant off Western Australia, removing its final regulatory hurdle.
The project is a joint venture by Chevron, Shell and ExxonMobil, which has signed a record US$41 billion contract with Chinese giant PetroChina Co and another worth $21 billion with India's Petronet LNG Ltd.
"I've considered it very carefully, I don't believe that there will be unacceptable (environmental) impacts and,as a consequence of that, I have made my decision today," Garrett said.
The Gorgon field, thought to hold more than 40 trillion cubic feet of gas, is expected to create thousands of jobs and pump billions of dollars into Australia's economy.
Chevron, majority partner in the project, welcomed Garrett's approval and said a final investment decision on the yet-to-be developed plant would be made in the coming months.
"The Gorgon project is Australia's largest single resource project and is set to deliver significant economic benefits and create around 10,000 indirect and direct jobs during peak construction,"said Roy Krzywosinski, the company's Australian managing director.
He said the plant was "globally and nationally significant", with an economic life of at least 40 years, adding it had been sited to minimise environmental impact.
Trade Minister Simon Crean said the deal was a major boost to Australia's profile as a green energy provider and proof China saw it as a key partner in its growth.
"This is a commitment by China to a long-term contract. They see Australia as part of its energy supply, but not just any energy - clean energy," he told reporters."The trade relationship with China continues to grow very strongly.The recent gas deal, there's a huge case in point."
Intense demand from the emerging economies of China and India for resources has underpinned a period of stellar growth for Australia's mining and energy sectors.
Trade with Beijing, the world's largest consumer of iron ore and coal, was worth US$58 billion last year alone.
Australia is the world's seventh-largest exporter of LNG and Chevron said the Gorgon project would secure Australia's position as a leading gas producer and generate a new source of wealth for the resource-rich nation.
According to trade officials, demand for LNG far exceeds supply and it is seen as the oil and gas industry's greatest growth area, particularly as customers look for cleaner energy sources.
Tuesday, August 25, 2009
Auto-makers join Energy Ministry's B5 promotion
Thirteen auto-makers have joined the Energy Ministry to promote use of B5 diesel throughout Thailand.
Energy Minister Wannarat Charnnukul told a recent media conference the ministry's Energy Business Department had been striving to improve the quality of biodiesel, which was mixed with ordinary diesel fuel to produce B5 diesel.
He said these efforts had taken effect on August 15 and that he was asking the automakers for confirmation that B5 diesel was of sufficient quality to meet with their approval, in order to create confidence among consumers and promote the use of B5 fuel.
There are now two types of biodiesel fuel on the market: B2 and B5. Sales of B5 are now 24 million litres a day, or about half of all diesel consumption, up from only 11 million litres a day, or 23 per cent of diesel consumption, a year ago.
Wannarat said promotion of B5 had been successful "to a certain extent" and that the ministry's policy was to have only one grade - B5 diesel - in use throughout Thailand by 2011.
"The ministry's policy is clearly to promote alternative fuels, and the next step is to encourage more people to use B5 fuel. If everyone uses B5, then we could lower oil imports 5 per cent, save Bt17 billion per year and help our farmers at the same time," he said.
Among the auto-makers supporting the B5 drive are the BMW Group Thailand, General Motors (Thailand), Chevrolet Sales (Thailand), Ford Sales and Service (Thaikand), Hino Motors (Thailand), Hyundai Motor (Thailand), Tri Petch Isuzu Sales, Mazda Sales (Thailand), Mercedes-Benz (Thailand), Mitsubishi Motors (Thailand), Nissan Motor (Thailand), Toyota Motor Thailand, Volvo Car (Thailand) and Volvo Truck and Bus (Thailand).
Energy Minister Wannarat Charnnukul told a recent media conference the ministry's Energy Business Department had been striving to improve the quality of biodiesel, which was mixed with ordinary diesel fuel to produce B5 diesel.
He said these efforts had taken effect on August 15 and that he was asking the automakers for confirmation that B5 diesel was of sufficient quality to meet with their approval, in order to create confidence among consumers and promote the use of B5 fuel.
There are now two types of biodiesel fuel on the market: B2 and B5. Sales of B5 are now 24 million litres a day, or about half of all diesel consumption, up from only 11 million litres a day, or 23 per cent of diesel consumption, a year ago.
Wannarat said promotion of B5 had been successful "to a certain extent" and that the ministry's policy was to have only one grade - B5 diesel - in use throughout Thailand by 2011.
"The ministry's policy is clearly to promote alternative fuels, and the next step is to encourage more people to use B5 fuel. If everyone uses B5, then we could lower oil imports 5 per cent, save Bt17 billion per year and help our farmers at the same time," he said.
Among the auto-makers supporting the B5 drive are the BMW Group Thailand, General Motors (Thailand), Chevrolet Sales (Thailand), Ford Sales and Service (Thaikand), Hino Motors (Thailand), Hyundai Motor (Thailand), Tri Petch Isuzu Sales, Mazda Sales (Thailand), Mercedes-Benz (Thailand), Mitsubishi Motors (Thailand), Nissan Motor (Thailand), Toyota Motor Thailand, Volvo Car (Thailand) and Volvo Truck and Bus (Thailand).
PTT embraces SCM system
PTT Plc plans to improve its cost controls to be more efficient by implementing a supply chain management system (SCM),which will be used for linking all related company parties under one roof, said president and chief executive Prasert Bunsumpun.
Mr Prasert said this was part of its strategic plan that focuses on integration in production, inventories, logistics, procurement and trading activities among its businesses, and it aims to complete system installation in the next three years.
The group's businesses include oil refining, exploration and production,and distribution for natural gas as well as petrochemicals.
"As these businesses are all related to energy, it is crucial to create synergy among the group in many aspects. A supply chain can help the company reduce costs and waste," said Mr Prasert.
"For example, with the new system you will see our quarterly results reports within a week instead of wasting time and personnel for three weeks to complete them as currently happens."
Its olefins arm, PTT Chemicals (PTTCH), was the first to invest in the system in 2007 with a commitment of 100 million baht. Mr Prasert declined to give the exact amount it saved, but said the amount for logistics was immense,that it may break even on its investment in one year, and that it is one of the most efficient companies in Asia.
Last year PTTCH traded 500,000 tonnes of polymers through its new system and that should increase to 1.5 million next year and 2.2 million a year later.
"We can monitor our product from oil or gas well to platform, until the final product is handed over to either corporate clients or motorists who fill their tanks in PTT service stations.
This gives the company a quicker read on what products clients actually use,data that can be used for its production plan.
"If we know real demand before hand,we can serve demand as if custom-made,making this the most effective way to cut inventory cost," said Mr Prasert.
The system also allows the company to monitor waste and loss throughout the supply chain, so that it can solve the problem at the root.
Mr Prasert predicts that within a few years, the PTT group will surpass other players in cost management in Asia.
"In the second half of this year new olefins crackers in the Middle East will start production, and while production costs are low, applying the SCM system means we can compete with other newcomers," he said.
He said there were other chemical producers in the PTT group that had yet to use SCM, and it would seek ways to link systems between similar businesses such as the petrochemical unit of Thai Oil, IRPC and PTT Aromatics and Refinery Plc connecting with PTTCH.
Prajya Phinyawat, the senior executive vice-president for petrochemicals and refining, said the oil and refinery businesses would install the system first as the group now operates more than 50 oil and refinery sites.
"The oil and refinery business alone should save around 300-400 million baht per year after SCM is complete," said Mr Prajya.
Shares of PTT closed yesterday on the Stock Exchange of Thailand at 247 baht, up 3 baht, in trade worth 1.45 billion baht.
Mr Prasert said this was part of its strategic plan that focuses on integration in production, inventories, logistics, procurement and trading activities among its businesses, and it aims to complete system installation in the next three years.
The group's businesses include oil refining, exploration and production,and distribution for natural gas as well as petrochemicals.
"As these businesses are all related to energy, it is crucial to create synergy among the group in many aspects. A supply chain can help the company reduce costs and waste," said Mr Prasert.
"For example, with the new system you will see our quarterly results reports within a week instead of wasting time and personnel for three weeks to complete them as currently happens."
Its olefins arm, PTT Chemicals (PTTCH), was the first to invest in the system in 2007 with a commitment of 100 million baht. Mr Prasert declined to give the exact amount it saved, but said the amount for logistics was immense,that it may break even on its investment in one year, and that it is one of the most efficient companies in Asia.
Last year PTTCH traded 500,000 tonnes of polymers through its new system and that should increase to 1.5 million next year and 2.2 million a year later.
"We can monitor our product from oil or gas well to platform, until the final product is handed over to either corporate clients or motorists who fill their tanks in PTT service stations.
This gives the company a quicker read on what products clients actually use,data that can be used for its production plan.
"If we know real demand before hand,we can serve demand as if custom-made,making this the most effective way to cut inventory cost," said Mr Prasert.
The system also allows the company to monitor waste and loss throughout the supply chain, so that it can solve the problem at the root.
Mr Prasert predicts that within a few years, the PTT group will surpass other players in cost management in Asia.
"In the second half of this year new olefins crackers in the Middle East will start production, and while production costs are low, applying the SCM system means we can compete with other newcomers," he said.
He said there were other chemical producers in the PTT group that had yet to use SCM, and it would seek ways to link systems between similar businesses such as the petrochemical unit of Thai Oil, IRPC and PTT Aromatics and Refinery Plc connecting with PTTCH.
Prajya Phinyawat, the senior executive vice-president for petrochemicals and refining, said the oil and refinery businesses would install the system first as the group now operates more than 50 oil and refinery sites.
"The oil and refinery business alone should save around 300-400 million baht per year after SCM is complete," said Mr Prajya.
Shares of PTT closed yesterday on the Stock Exchange of Thailand at 247 baht, up 3 baht, in trade worth 1.45 billion baht.
Oil falls below $74 in Asia as stocks retreat
Oil prices fell below $74 Tuesday in Asia, taking a cue from weak stock markets and expectations the end of the summer driving season in the US will sap already weak demand.
Benchmark crude for October delivery was down 50 cents to $73.87 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.
Nearly all regional stock markets were lower yesterday, providing a negative lead for the oil market which often looks to the performance of equities as a gauge of economic optimism and therefore crude demand.
Oil approached $75 a barrel Monday for the first time in 10 months amid optimism that the worlds economies are on the mend but fell back to settle at $74.37, up 48 cents on the day.
Expectations that demand for energy will grow, at least for oil and gasoline,were spurred by Federal Reserve Chairman Ben Bernanke, who said Friday the recession-hit US economy is reviving. Bernankes remarks and signs of improvement in the US housing market sent stock markets higher, and that carried over into the new week.
Despite the optimism about recovery from recession, analysts say energy demand remains in the doldrums and seasonally lower demand for gasoline as the summer holidays end will exacer-bate that weakness.
Oil at the $70-plus level remain potentially vulnerable because there is little constructive fundamental support,inventories are high and global demand remains weak, said Vi ctor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
In my view, oil prices will likely give in to the fundamentals in the coming week. Seasonally, oil demand is lower in autumn, so reduced demand in the shoulder season may put further pressure on oil.
In other Nymex trading, gasoline for September delivery fell 0.91 cents to $2.04 a gallon and heating oil was down 2.15 cents to $1.9020 a gallon. Natural gas fell 2.6 cents to $2.897 per 1,000 cubic feet.
In London, Brent crude was down 64 cents at $73.62.
Mondays pr ice gains ... could be interpreted as rather impressive given the strengthening in the US dollar and a drop in the equity markets, said ODL Securities analyst Marius Paun in a note to clients.
Ro bust sentiment on (a) global economic recovery still provides strong support for the energy complex, especially after both (US) Fed Chairman Ben Bernanke and ECB President ( Jean-Claude) Trichet talked about signs indicating the world economy has bottomed.
Benchmark crude for October delivery was down 50 cents to $73.87 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.
Nearly all regional stock markets were lower yesterday, providing a negative lead for the oil market which often looks to the performance of equities as a gauge of economic optimism and therefore crude demand.
Oil approached $75 a barrel Monday for the first time in 10 months amid optimism that the worlds economies are on the mend but fell back to settle at $74.37, up 48 cents on the day.
Expectations that demand for energy will grow, at least for oil and gasoline,were spurred by Federal Reserve Chairman Ben Bernanke, who said Friday the recession-hit US economy is reviving. Bernankes remarks and signs of improvement in the US housing market sent stock markets higher, and that carried over into the new week.
Despite the optimism about recovery from recession, analysts say energy demand remains in the doldrums and seasonally lower demand for gasoline as the summer holidays end will exacer-bate that weakness.
Oil at the $70-plus level remain potentially vulnerable because there is little constructive fundamental support,inventories are high and global demand remains weak, said Vi ctor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
In my view, oil prices will likely give in to the fundamentals in the coming week. Seasonally, oil demand is lower in autumn, so reduced demand in the shoulder season may put further pressure on oil.
In other Nymex trading, gasoline for September delivery fell 0.91 cents to $2.04 a gallon and heating oil was down 2.15 cents to $1.9020 a gallon. Natural gas fell 2.6 cents to $2.897 per 1,000 cubic feet.
In London, Brent crude was down 64 cents at $73.62.
Mondays pr ice gains ... could be interpreted as rather impressive given the strengthening in the US dollar and a drop in the equity markets, said ODL Securities analyst Marius Paun in a note to clients.
Ro bust sentiment on (a) global economic recovery still provides strong support for the energy complex, especially after both (US) Fed Chairman Ben Bernanke and ECB President ( Jean-Claude) Trichet talked about signs indicating the world economy has bottomed.
PTT TO SPEND BT1 BN ON SUPPLY-CHAIN MANAGEMENT
PTT will spend Bt1 billion over the next three years to install a supply-chain management (SCM) system that will oversee logistics for all of its business units, suppliers and customers.
"Our SCM will emphasise real-time information, thus increasing our efficiency. This will support PTT's quest to become one of the top 100 companies on the Fortune list within five years," said president and CEO Prasert Bunsumpun.
He said the system would manage production and shipment to customers, decreasing operating costs and increasing customer satisfaction in the process.
Driving the investment will be the successful SCM of its polymer operations, which involve subsidiaries PTT Chemical, PTT Polymer Marketing, PTT ICT Solutions, PTT Polymer Logistics and Bangkok Polyethylene.
This will be expanded during the three-year period to include the petrochemical, oil and natural-gas operations.
Prajya Phinyawat, president for refining operations at PTT, said SCM would reduce annual business expenses by Bt300 to Bt400 million.
PTT Chemical president Veerasak Kositpaisal said that even though an SCM system for polymer operations would cost Bt100 million, it would break even within a year.
Transportation costs would drop to US$50 (1,700) per tonne, or only 5 per cent of total cost.
Within two years, the system would be applied to other petrochemical products for an additional cost of Bt100 million.
Veerasak said logistics costs amounted to 19 per cent of gross domestic product at present, making Thailand less competitive than other countries. Spending on logistics is thus important for the PTT Group, particularly in the petrochemical industry, where more than half of output is exported.
He said the export ratio would rise following installation of the SCM system, particularly after PTT Chemical's capacity expanded by 1 million tonnes late this year as scheduled.
"Comparatively, PTT's chemical business competes well with naphtha-based plants abroad, which account for more than half of all chemical plants. However, we're less competitive with Middle East factories, whose products will hit the market late this year. SCM will thus be expanded to cover other segments to reduce management costs," Veerasak said.
He also believes PTT Chemical's financial results will improve further. The company posted a second-quarter net profit of Bt2.1 billion, against a net loss of Bt400 million in the first quarter. He attributed the improvement to measures to counter the economic crisis that were implemented late last year, involving cost and cash management as well as SCM.
However, he admitted some risk factors remained in the second half, due to new supply from the Middle East.
"Our SCM will emphasise real-time information, thus increasing our efficiency. This will support PTT's quest to become one of the top 100 companies on the Fortune list within five years," said president and CEO Prasert Bunsumpun.
He said the system would manage production and shipment to customers, decreasing operating costs and increasing customer satisfaction in the process.
Driving the investment will be the successful SCM of its polymer operations, which involve subsidiaries PTT Chemical, PTT Polymer Marketing, PTT ICT Solutions, PTT Polymer Logistics and Bangkok Polyethylene.
This will be expanded during the three-year period to include the petrochemical, oil and natural-gas operations.
Prajya Phinyawat, president for refining operations at PTT, said SCM would reduce annual business expenses by Bt300 to Bt400 million.
PTT Chemical president Veerasak Kositpaisal said that even though an SCM system for polymer operations would cost Bt100 million, it would break even within a year.
Transportation costs would drop to US$50 (1,700) per tonne, or only 5 per cent of total cost.
Within two years, the system would be applied to other petrochemical products for an additional cost of Bt100 million.
Veerasak said logistics costs amounted to 19 per cent of gross domestic product at present, making Thailand less competitive than other countries. Spending on logistics is thus important for the PTT Group, particularly in the petrochemical industry, where more than half of output is exported.
He said the export ratio would rise following installation of the SCM system, particularly after PTT Chemical's capacity expanded by 1 million tonnes late this year as scheduled.
"Comparatively, PTT's chemical business competes well with naphtha-based plants abroad, which account for more than half of all chemical plants. However, we're less competitive with Middle East factories, whose products will hit the market late this year. SCM will thus be expanded to cover other segments to reduce management costs," Veerasak said.
He also believes PTT Chemical's financial results will improve further. The company posted a second-quarter net profit of Bt2.1 billion, against a net loss of Bt400 million in the first quarter. He attributed the improvement to measures to counter the economic crisis that were implemented late last year, involving cost and cash management as well as SCM.
However, he admitted some risk factors remained in the second half, due to new supply from the Middle East.
Daewoo consortium in Burmese gas deal
A consortium led by South Korea's Daewoo International would invest about $5.6 billion to develop Burmese gas fields as part of a 30-year natural gas supply deal with China, a group member said yesterday.
The investment comes just a week after China signed a $41 billion liquefied natural gas import deal with Australia,underscoring its strong appetite for a broad range of commodities from gas and uranium to iron ore and coal.
The Burmese gas development plan,which has been mooted since 2004, will allow the consortium to supply natural gas to China's top state oil and gas firm,China National Petroleum Corp (CNPC),with a peak daily production of 500 million cubic feet, or about 3.8 million tonnes annually.
The supply, due from 2013 from the Shwe and ShwePhyu fields in Burma's A-1 offshore block and Mya field in A-3 offshore block, amounts to around 7%of China's current gas consumption of 7.3 billion cubic feet per day, which is expected to grow rapidly.
Currently meeting only 3% of China's total energy needs, gas use is set to grow at a 10% compound annual rate to 18 billion cubic feet per day by 2020, according to Bernstein Research, transforming China into the third largest single market after Russia and the United States.
Daewoo has a 51% stake in the consortium and the other shareholders are India's Oil and Natural Gas Corp with 17%, Myanmar Oil & Gas Enterprise with 15%, India's GAIL with 8.5%, and Korea Gas Corp with 8.5%.
"Daewoo will spend 2.1 trillion won ($1.68 billion) in initial investment for five years until 2014 and KOGAS would spend $299 million," the two firms said in separate statements.
A KOGAS official said total investment by the consortium would amount to about $5.6 billion, including $4.6 billion in initial spending.
The consortium will undertake production and offshore pipeline transportation, while land transportation to China will be jointly managed with China National United Oil Corp (CNUOC).
The investment still needs approval from the army-ruled Burmese government, and CNUOC has yet to decide details of its investment for land transportation to China.
Chinese media have said the consortium and CNUOC planned to build oil and gas pipelines through Burma and into China's southwestern Yunnan province, bypassing the long journey around the Malacca Strait.
Burma will also be able to tap the pipeline running across its territory to promote economic development once the gas starts flowing.
Few Western companies will invest in Burma because of its poor human rights record and continued detention of Nobel Peace Prize laureate Aung San Suu Kyi, which has led to a broad range of U.S. and European sanctions.
China, typically wary of supporting or imposing sanctions and one of Burma's few diplomatic allies, has shown no qualms about investing in its neighbour, eager for its natural gas, oil, minerals and timber to feed a booming economy.
The investment comes just a week after China signed a $41 billion liquefied natural gas import deal with Australia,underscoring its strong appetite for a broad range of commodities from gas and uranium to iron ore and coal.
The Burmese gas development plan,which has been mooted since 2004, will allow the consortium to supply natural gas to China's top state oil and gas firm,China National Petroleum Corp (CNPC),with a peak daily production of 500 million cubic feet, or about 3.8 million tonnes annually.
The supply, due from 2013 from the Shwe and ShwePhyu fields in Burma's A-1 offshore block and Mya field in A-3 offshore block, amounts to around 7%of China's current gas consumption of 7.3 billion cubic feet per day, which is expected to grow rapidly.
Currently meeting only 3% of China's total energy needs, gas use is set to grow at a 10% compound annual rate to 18 billion cubic feet per day by 2020, according to Bernstein Research, transforming China into the third largest single market after Russia and the United States.
Daewoo has a 51% stake in the consortium and the other shareholders are India's Oil and Natural Gas Corp with 17%, Myanmar Oil & Gas Enterprise with 15%, India's GAIL with 8.5%, and Korea Gas Corp with 8.5%.
"Daewoo will spend 2.1 trillion won ($1.68 billion) in initial investment for five years until 2014 and KOGAS would spend $299 million," the two firms said in separate statements.
A KOGAS official said total investment by the consortium would amount to about $5.6 billion, including $4.6 billion in initial spending.
The consortium will undertake production and offshore pipeline transportation, while land transportation to China will be jointly managed with China National United Oil Corp (CNUOC).
The investment still needs approval from the army-ruled Burmese government, and CNUOC has yet to decide details of its investment for land transportation to China.
Chinese media have said the consortium and CNUOC planned to build oil and gas pipelines through Burma and into China's southwestern Yunnan province, bypassing the long journey around the Malacca Strait.
Burma will also be able to tap the pipeline running across its territory to promote economic development once the gas starts flowing.
Few Western companies will invest in Burma because of its poor human rights record and continued detention of Nobel Peace Prize laureate Aung San Suu Kyi, which has led to a broad range of U.S. and European sanctions.
China, typically wary of supporting or imposing sanctions and one of Burma's few diplomatic allies, has shown no qualms about investing in its neighbour, eager for its natural gas, oil, minerals and timber to feed a booming economy.
YOUTHS URGED TO JOIN ENERGY COMPETITION
Bangchak Petroleum is extending its alternative-energy contest for the third year and has reaffirmed its leading role as a promoter of alternative fuels.
Its chief goal is to persuade youngsters to join the effort to tackling global warming.
Under the theme of "Towards the Goal of Thailand as Asia's No-1 Player in Alternative Energy",the project has been launched with cooperation from the Office of the Basic Dducation Commission.
Winners stand to reap Bt2 million worth of prizes.
"In this year's contest, youths must answer how biodiesel and gasohol can alleviate our economic problems and reduce the danger of global warming," said Bangchak president Anusorn Sangnimnuan.
"We believe this project could disperse knowledge about alternative energy among 1.5 million youths.
"After the project comes to a close, the ideas submitted will be sent to the Energy Ministry, to show that Thai youths are aware and taking part in the nation's efforts to be a leader in alternative energy."
Each year, Bangchak mobilises support from more than 200 employees to promote knowledge om niodiesel and gasohol, which have gained popularity in other countries, as well.
"Some countries with advanced technology are stepping up efforts to obtain support from a new generation.
The moves are aimed at using non-food materials like single-cell seaweed for biodiesel and plant cellulose for ethanol.
"Leading economies in the 21st century should excel in the field of clean energy," Anusorn said.
Bangchak now consumes 200,000 litres of ethanol a day in offering gasohol products to Thai consumers.
Thailand's biodiesel and gasohol consumption accounts for 4.3 percent of total energy use.
If consumption reaches 15 per cent,Thailand can save up to Bt100 billion by reducing oil imports.
This will ensure energy stability and help both the environment and farmers.
Ther contest is now seeking participants from high-school students nationwide.
They can express their ideas through exhibition boards.
Students from more than 3,000 schools have been invited to take part and sign up between next Sunday and October 20.
For more information, visit www.bangchak.co.th.
If consumption reaches 15 per cent, Thailand can save up to Bt100 billion by reducing oil imports.
A POSTER from Bangchak Petroleum urges students to join its competition seeking innovative energy ideas and promoting biodiesel and ethanol fuels.
Its chief goal is to persuade youngsters to join the effort to tackling global warming.
Under the theme of "Towards the Goal of Thailand as Asia's No-1 Player in Alternative Energy",the project has been launched with cooperation from the Office of the Basic Dducation Commission.
Winners stand to reap Bt2 million worth of prizes.
"In this year's contest, youths must answer how biodiesel and gasohol can alleviate our economic problems and reduce the danger of global warming," said Bangchak president Anusorn Sangnimnuan.
"We believe this project could disperse knowledge about alternative energy among 1.5 million youths.
"After the project comes to a close, the ideas submitted will be sent to the Energy Ministry, to show that Thai youths are aware and taking part in the nation's efforts to be a leader in alternative energy."
Each year, Bangchak mobilises support from more than 200 employees to promote knowledge om niodiesel and gasohol, which have gained popularity in other countries, as well.
"Some countries with advanced technology are stepping up efforts to obtain support from a new generation.
The moves are aimed at using non-food materials like single-cell seaweed for biodiesel and plant cellulose for ethanol.
"Leading economies in the 21st century should excel in the field of clean energy," Anusorn said.
Bangchak now consumes 200,000 litres of ethanol a day in offering gasohol products to Thai consumers.
Thailand's biodiesel and gasohol consumption accounts for 4.3 percent of total energy use.
If consumption reaches 15 per cent,Thailand can save up to Bt100 billion by reducing oil imports.
This will ensure energy stability and help both the environment and farmers.
Ther contest is now seeking participants from high-school students nationwide.
They can express their ideas through exhibition boards.
Students from more than 3,000 schools have been invited to take part and sign up between next Sunday and October 20.
For more information, visit www.bangchak.co.th.
If consumption reaches 15 per cent, Thailand can save up to Bt100 billion by reducing oil imports.
A POSTER from Bangchak Petroleum urges students to join its competition seeking innovative energy ideas and promoting biodiesel and ethanol fuels.
IRPC gives up on refining business
IRPC Plc, a petrochemical manufacturer and oil refiner affiliated with PTT Plc,has decided to focus solely on the petrochemical business now that the increasing popularity of alternative fuels has dimmed the prospects of its refinery.
"We've decided to move ahead to achieve our goal of being a leader in integrated petrochemical business. The refining unit will still be running only to serve our petrochemical units," said chief executive Pailin Chuchottaworn.
Dr Pailin pointed out that IRPC's business strategy needed to be improved as part of its plan to rehabilitate the company's performance, which has underperformed in recent years.
Atikom Terbsiri, senior executive vice-president for corporate strategy planning, said the refining industry was facing sluggish demand and a surge in supply, clouding the outlook of the industry.
Factors curbing the demand include the global economic slump and the fast adoption of alternative fuels to replace conventional fuels, estimated to reach 20% in the future. Furthermore,large refinery players are entering the global market.
"Under such a circumstance, refining margins are under pressure. Given both external and internal factors, we decided to change direction," Mr Atikom said.
IRPC's new business strategy aims to transform its operation into the topquartile integrated petrochemical complex in Asia by 2014.
The strategy involves improving production capacity, adding value, reducing cost, maximising asset value and investing in high-margin products.
More investment is planned for the petrochemical unit to increase efficiency and expand the capacities of highmargin and high-growth products such as acrylonitrile-butadiene-styrene (ABS)and polypropylene.
It also plans to commercialise its ports and tank facilities through possible joint-venture investments.
Its 11,000 rai of unutilised land mainly in Rayong, Songkhla and Chiang Mai provinces, would be developed as industrial land serving local industries and some of the plots may also be sold.
"To implement these plans, a $1.2-billion investment is planned over the next five years from our own generated cash flow. More loans will be sought if this is not enough as our lever-age is relatively low. Our debt-to-equity ratio is only 0.3 times," Mr Atikom said.
Dr Pailin said the undeveloped assets had been a drag on the company's performance. He hopes the new business strategy will improve the company's return on invested capital (ROIC)to three times the current level in the next five years.
"Our ROIC is currently at 8-9%. Compared to our peers, we have the capacity and potential to improve. So the target is to achieve a 23% return by 2014. This goal is possible when our initiatives are accomplished," he said.
The executive expects crude prices,at $72 a barrel in Dubai, to stay at this level until the end of the year although short-term fluctuations cannot be ruled out.
Crude prices at these levels will continue to suppress refining margins but the petrochemical industry is benefiting from improving demand in China, a trend also likely to continue until yearend.
In any case, he expects an improvement in performance in the third quarter and further gains in the last quarter if petrochemical product prices continued to improve.
IRPC shares closed yesterday on the SET at 3.44 baht, unchanged, in trade worth 102.6 million baht.
"We've decided to move ahead to achieve our goal of being a leader in integrated petrochemical business. The refining unit will still be running only to serve our petrochemical units," said chief executive Pailin Chuchottaworn.
Dr Pailin pointed out that IRPC's business strategy needed to be improved as part of its plan to rehabilitate the company's performance, which has underperformed in recent years.
Atikom Terbsiri, senior executive vice-president for corporate strategy planning, said the refining industry was facing sluggish demand and a surge in supply, clouding the outlook of the industry.
Factors curbing the demand include the global economic slump and the fast adoption of alternative fuels to replace conventional fuels, estimated to reach 20% in the future. Furthermore,large refinery players are entering the global market.
"Under such a circumstance, refining margins are under pressure. Given both external and internal factors, we decided to change direction," Mr Atikom said.
IRPC's new business strategy aims to transform its operation into the topquartile integrated petrochemical complex in Asia by 2014.
The strategy involves improving production capacity, adding value, reducing cost, maximising asset value and investing in high-margin products.
More investment is planned for the petrochemical unit to increase efficiency and expand the capacities of highmargin and high-growth products such as acrylonitrile-butadiene-styrene (ABS)and polypropylene.
It also plans to commercialise its ports and tank facilities through possible joint-venture investments.
Its 11,000 rai of unutilised land mainly in Rayong, Songkhla and Chiang Mai provinces, would be developed as industrial land serving local industries and some of the plots may also be sold.
"To implement these plans, a $1.2-billion investment is planned over the next five years from our own generated cash flow. More loans will be sought if this is not enough as our lever-age is relatively low. Our debt-to-equity ratio is only 0.3 times," Mr Atikom said.
Dr Pailin said the undeveloped assets had been a drag on the company's performance. He hopes the new business strategy will improve the company's return on invested capital (ROIC)to three times the current level in the next five years.
"Our ROIC is currently at 8-9%. Compared to our peers, we have the capacity and potential to improve. So the target is to achieve a 23% return by 2014. This goal is possible when our initiatives are accomplished," he said.
The executive expects crude prices,at $72 a barrel in Dubai, to stay at this level until the end of the year although short-term fluctuations cannot be ruled out.
Crude prices at these levels will continue to suppress refining margins but the petrochemical industry is benefiting from improving demand in China, a trend also likely to continue until yearend.
In any case, he expects an improvement in performance in the third quarter and further gains in the last quarter if petrochemical product prices continued to improve.
IRPC shares closed yesterday on the SET at 3.44 baht, unchanged, in trade worth 102.6 million baht.
Monday, August 24, 2009
GOLD TRADERS WARN OF VOLATILITY IN WEEKS AHEAD
The next few weeks will be a crucial period for gold prices, and slight volatility is expected to indicate whether bullion prices will rise to US$1,000 (Bt34,100) or fall to $880 an ounce this year.
Gold traders have warned of volatility from the derivatives market rather than physical gold trading. Oil prices and the US dollar are still affecting gold prices more than real gold consumption is, but it is uncertain whether oil prices will continue to increase, because movements to date are believed to have been forced by hedging.
Gold Traders Association deputy secretary-general Kritcharat Hirunyasiri said that over the past month, there had been no clear signs of whether gold prices would rise or fall. Prices had moved in a range of $935 to $965 an ounce, but the range was narrowing, and it was expected that a clear direction would become obvious within the next two weeks.
Kritcharat said if the gold price broke through the $963-an-ounce level, it could rise to $980 and then $1,000 by year-end. However, if it failed to break $930 an ounce, the price could fall to $900.
"The dollar has more of an effect on gold prices," Kritcharat said. "For example, last Friday night the gold price increased $15 per ounce after the dollar depreciated from 1.422 to the euro 1.435, while oil prices made a smaller impact."
Although the golbal economy has begun to recover from the economic crisis, the US Federal Reserve is unlikely to adjust its interest rate in the short term. Inflation remains low and does not affect gold prices much even though inflation and gold prices are correlated, he said.
President Jitti Tangsithpakdi said it was possible gold would reach $1,000 an ounce this year, because the global economy had still not stabilised. Therefore, people are still investing in gold. As well, there is always high demand for gold at the end of a year.
However, gold prices will not swing as much as they did last year, because funds are investing in many markets, including equities, oil and gold, he said.
Secretary-general Pichaya Phisuthikul said that in the middle of the month, the gold price declined, but it increased again in the past week as oil prices rose to $60 to $70 a barrel.
Gold prices will remain volatile, he said. Normally, gold prices move contrary to the Equity Index, but recently when equities have risen, gold prices have sometimes risen, as well.
"The present gold price is not related to real consumption at all but rather affected by funds investing in the gold market.
"The recovery, which has been seen in stock markets like Wall Street, including oil-price increases, is still not certain. I believe the economy, which has been severely damaged, needs more time for recovery. Therefore, the present oil-price and Equity Index rises may be an illusion, because they show an adjustment much better than fundamentals," Pichaya said.
If oil prices and the Equity Indexes fall again, the gold price will also be affected. In Pichaya's view, gold prices are capable of peaking at $980 an ounce or bottoming at $880.
Meanwhile, Bloomberg said gold, little changed in London yesterday, might decline as a stronger dollar erodes the metal's appeal as an alternative investment. Palladium rose to its highest price in almost a year.
The US Dollar Index, a six-currency gauge of the greenback's value, rebounded from a two-week low, gaining as much as 0.4 per cent. Gold, which typically moves inversely to the dollar, added 1.4 per cent last Friday, the most this month.
"The market is likely to retreat towards $925 to $930 an ounce, provided the dollar rebounds from current lows," said VTB Capital analyst Andrey Kryuchenkov in London.
Immediate-delivery bullion climbed 45 cents, or 0.1 per cent, to $954.30 an ounce yesterday after advancing 0.6 per cent last week.
December gold futures rose 90 cents, or 0.1 per cent, to $955.60 an ounce on the New York Mercantile Exchange's Comex division.
Gold traders have warned of volatility from the derivatives market rather than physical gold trading. Oil prices and the US dollar are still affecting gold prices more than real gold consumption is, but it is uncertain whether oil prices will continue to increase, because movements to date are believed to have been forced by hedging.
Gold Traders Association deputy secretary-general Kritcharat Hirunyasiri said that over the past month, there had been no clear signs of whether gold prices would rise or fall. Prices had moved in a range of $935 to $965 an ounce, but the range was narrowing, and it was expected that a clear direction would become obvious within the next two weeks.
Kritcharat said if the gold price broke through the $963-an-ounce level, it could rise to $980 and then $1,000 by year-end. However, if it failed to break $930 an ounce, the price could fall to $900.
"The dollar has more of an effect on gold prices," Kritcharat said. "For example, last Friday night the gold price increased $15 per ounce after the dollar depreciated from 1.422 to the euro 1.435, while oil prices made a smaller impact."
Although the golbal economy has begun to recover from the economic crisis, the US Federal Reserve is unlikely to adjust its interest rate in the short term. Inflation remains low and does not affect gold prices much even though inflation and gold prices are correlated, he said.
President Jitti Tangsithpakdi said it was possible gold would reach $1,000 an ounce this year, because the global economy had still not stabilised. Therefore, people are still investing in gold. As well, there is always high demand for gold at the end of a year.
However, gold prices will not swing as much as they did last year, because funds are investing in many markets, including equities, oil and gold, he said.
Secretary-general Pichaya Phisuthikul said that in the middle of the month, the gold price declined, but it increased again in the past week as oil prices rose to $60 to $70 a barrel.
Gold prices will remain volatile, he said. Normally, gold prices move contrary to the Equity Index, but recently when equities have risen, gold prices have sometimes risen, as well.
"The present gold price is not related to real consumption at all but rather affected by funds investing in the gold market.
"The recovery, which has been seen in stock markets like Wall Street, including oil-price increases, is still not certain. I believe the economy, which has been severely damaged, needs more time for recovery. Therefore, the present oil-price and Equity Index rises may be an illusion, because they show an adjustment much better than fundamentals," Pichaya said.
If oil prices and the Equity Indexes fall again, the gold price will also be affected. In Pichaya's view, gold prices are capable of peaking at $980 an ounce or bottoming at $880.
Meanwhile, Bloomberg said gold, little changed in London yesterday, might decline as a stronger dollar erodes the metal's appeal as an alternative investment. Palladium rose to its highest price in almost a year.
The US Dollar Index, a six-currency gauge of the greenback's value, rebounded from a two-week low, gaining as much as 0.4 per cent. Gold, which typically moves inversely to the dollar, added 1.4 per cent last Friday, the most this month.
"The market is likely to retreat towards $925 to $930 an ounce, provided the dollar rebounds from current lows," said VTB Capital analyst Andrey Kryuchenkov in London.
Immediate-delivery bullion climbed 45 cents, or 0.1 per cent, to $954.30 an ounce yesterday after advancing 0.6 per cent last week.
December gold futures rose 90 cents, or 0.1 per cent, to $955.60 an ounce on the New York Mercantile Exchange's Comex division.
Oil prices climb above $74 on recovery hopes
Oil prices climbed above $74 a barrel yesterday in Asia amid spreading optimism about a global economic recovery.
Expectations that demand for energy will grow were spurred by Federal Reserve Chairman Ben Bernanke who said Friday that the US economy is reviving.
Benchmark crude for October delivery rose 22 cents to $74.11 a barrel by mid-afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Friday, it jumped 98 cents to settle at $73.89.
In more good news for the US eco-nomy, the National Association of Realtors said Friday that home resales posted the largest monthly increase in at least 10 years.
Asian stock markets rallied on recovery hopes, with Japan's Nikkei 225 index jumping 3.4%.
In other Nymex trading, gasoline for September delivery added 2.43 cents to $2.0199 a gallon and heating oil for September delivery added 1.28 cents to $1.9177 a gallon. Natural gas for September deliver y fell 2.9 cents to $2.775 per 1,000 cubic feat after tumbling another 14.1 Friday.
In London, Brent prices rose 29 cents to $74.50 a barrel on the ICE Futures exchange.
Sentiment remains broadly supportive of commodities including oil in anticipation of an economic recovery,"said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.
New York cr ude prices scaled new 2009 highs last week, rising above $74 Friday on a weak greenback, an improved US macro-economic outlook and positive eurozone data.
The New York contract soared to $74.72 during US trading Friday, a level last seen on October 20, 2008, before easing to close at $73.89.
A slew of economic data released last week suggested the US economy and euro-zone economies were likely recovering, boosting hopes that energy demand in tur n would see an uptick,analysts said.
"Data is sparse this week but should all support the view that recession is over,"analysts from Singapore's DBS Bank said in a report in its view on the US economy.
Last week, the National Association of Realtors reported that US existinghome sales surged 7.2% in July to a seasonally adjusted annual rate of 5.24 million units, lifting hopes the world's biggest economy was heading for a recovery.
The slumping US dollar against the euro also fuelled support for crude oil,analysts said.
A w eaker dollar tends to stimulate demand for dollar-priced crude oil,which becomes cheaper for buyers using stronger currencies. In turn, that pushes prices higher.
Expectations that demand for energy will grow were spurred by Federal Reserve Chairman Ben Bernanke who said Friday that the US economy is reviving.
Benchmark crude for October delivery rose 22 cents to $74.11 a barrel by mid-afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Friday, it jumped 98 cents to settle at $73.89.
In more good news for the US eco-nomy, the National Association of Realtors said Friday that home resales posted the largest monthly increase in at least 10 years.
Asian stock markets rallied on recovery hopes, with Japan's Nikkei 225 index jumping 3.4%.
In other Nymex trading, gasoline for September delivery added 2.43 cents to $2.0199 a gallon and heating oil for September delivery added 1.28 cents to $1.9177 a gallon. Natural gas for September deliver y fell 2.9 cents to $2.775 per 1,000 cubic feat after tumbling another 14.1 Friday.
In London, Brent prices rose 29 cents to $74.50 a barrel on the ICE Futures exchange.
Sentiment remains broadly supportive of commodities including oil in anticipation of an economic recovery,"said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.
New York cr ude prices scaled new 2009 highs last week, rising above $74 Friday on a weak greenback, an improved US macro-economic outlook and positive eurozone data.
The New York contract soared to $74.72 during US trading Friday, a level last seen on October 20, 2008, before easing to close at $73.89.
A slew of economic data released last week suggested the US economy and euro-zone economies were likely recovering, boosting hopes that energy demand in tur n would see an uptick,analysts said.
"Data is sparse this week but should all support the view that recession is over,"analysts from Singapore's DBS Bank said in a report in its view on the US economy.
Last week, the National Association of Realtors reported that US existinghome sales surged 7.2% in July to a seasonally adjusted annual rate of 5.24 million units, lifting hopes the world's biggest economy was heading for a recovery.
The slumping US dollar against the euro also fuelled support for crude oil,analysts said.
A w eaker dollar tends to stimulate demand for dollar-priced crude oil,which becomes cheaper for buyers using stronger currencies. In turn, that pushes prices higher.
PTTEP MAY NEED 50 DAYS TO PLUG TIMOR SEA RIG
PTT Exploration and Production said it might take 50 days to stop an oil and gas leak off northwest Australia as marine authorities fight to prevent the slick harming migratory whales and breeding turtles.
PTT may move a rig from Singapore to plug a well leaking 3,500 metres beneath the seabed, said Jose Martins, a director of the Thai company's Australian unit.
Oil, gas and condensate started seeping into the Timor Sea last Friday from the West Atlas drilling rig.
Australia's decision this week on whether to approve Chevron Corp's A$50 billion (Bt1.4 trillion) Gorgon liquefied natural gas project to the south won't be influenced by the spill, environment minister Peter Garrett said yesterday.
The leak has caused a 30-kilometre light-oil slick off the Kimberley, a region Tourism Australia describes as "one of the world's last true wilderness areas."
The incident is "potentially going to bring a bit of attention on itself and on the industry," said Peter Arden, a Melbourne-based mining analyst at Ord Minnett, an affiliate of JPMorgan Chase. "Most of the big guys do their work very carefully because they just can't afford a headline like this."
PTT, Thailand's only publicly traded exploration company, rose Bt7.00 to close at Bt244.00 and its subsidiary PTT Exploration and Production edged up Bt1.00 to Bt142.00 as crude oil traded near a 10-month high.
The company will pay for the cost of dispersing the slick, PTTEP Australasia's Martins said in Perth on Sunday.
He declined to comment on the risk of the West Atlas rig catching fire, what caused the leak, how much oil or gas may be flowing out, or the related costs. All 69 crew were evacuated on Friday.
"MARINE SUPERHIGHWAY"
The area has been dubbed a "marine superhighway", Australian Greens marine spokeswoman Senator Rachel Siewert said on Sunday. "There are populations of baby turtles this time of year, and the area also serves as a migrator route for whales and other marine life."
The slick is drifting away from the mainland in a northwesterly direction and unlikely to reach the coastline, Western Australia Premier Colin Barnett said yesterday.
It may still affect the Ashmore Reef, about 840 kilometres west of Darwin and 610 kilometres north of Broome, he said.
The reef is regarded by the government as a "biodiversity hotspot" because it intersects the bio-geogrphical regions of Australia and Southeast Asia.
PTT may move a rig from Singapore to plug a well leaking 3,500 metres beneath the seabed, said Jose Martins, a director of the Thai company's Australian unit.
Oil, gas and condensate started seeping into the Timor Sea last Friday from the West Atlas drilling rig.
Australia's decision this week on whether to approve Chevron Corp's A$50 billion (Bt1.4 trillion) Gorgon liquefied natural gas project to the south won't be influenced by the spill, environment minister Peter Garrett said yesterday.
The leak has caused a 30-kilometre light-oil slick off the Kimberley, a region Tourism Australia describes as "one of the world's last true wilderness areas."
The incident is "potentially going to bring a bit of attention on itself and on the industry," said Peter Arden, a Melbourne-based mining analyst at Ord Minnett, an affiliate of JPMorgan Chase. "Most of the big guys do their work very carefully because they just can't afford a headline like this."
PTT, Thailand's only publicly traded exploration company, rose Bt7.00 to close at Bt244.00 and its subsidiary PTT Exploration and Production edged up Bt1.00 to Bt142.00 as crude oil traded near a 10-month high.
The company will pay for the cost of dispersing the slick, PTTEP Australasia's Martins said in Perth on Sunday.
He declined to comment on the risk of the West Atlas rig catching fire, what caused the leak, how much oil or gas may be flowing out, or the related costs. All 69 crew were evacuated on Friday.
"MARINE SUPERHIGHWAY"
The area has been dubbed a "marine superhighway", Australian Greens marine spokeswoman Senator Rachel Siewert said on Sunday. "There are populations of baby turtles this time of year, and the area also serves as a migrator route for whales and other marine life."
The slick is drifting away from the mainland in a northwesterly direction and unlikely to reach the coastline, Western Australia Premier Colin Barnett said yesterday.
It may still affect the Ashmore Reef, about 840 kilometres west of Darwin and 610 kilometres north of Broome, he said.
The reef is regarded by the government as a "biodiversity hotspot" because it intersects the bio-geogrphical regions of Australia and Southeast Asia.
Leak may cost PTTEP 6% profit drop
Profit at the only publicly traded Thai petroleum exploration firmmay fall by 6% this year as a result of an oil-rig leak in Timor, but the overall impact should be minimal, according to stock analysts.
Oil and gas condensate has been leaking from a well at the offshore Montara field in northwest Australia owned by PTT Exploration and Production (PTTEP) since Friday.
Vichitr Kuladejkhuna, an analyst from DBS Vickers Securities, said the incident may cost the company between US$10 to $50 million depending on how well and fast it controls the situation and limits the damages.
"If the damages are in the range between $10-50 million, PTTEP's profit might drop by as much as 6% from this year," said Mr Vichitr.
But a Tisco Securities analyst said the incident will have only a minimal impact on the company since the damage and the costs of clearing up the spills and fixing the leak should be covered by insurance.
"As a result of the accident, the production start-up schedule will be delayed from November this year to around early next year," said Chaipat Thanawattano, deputy head of research Tisco Securities.
"We also estimate that every $10 million of the extra cost from the incident would devalue PTTEP's net assets by 0.1%," he added.
Mr Chaipat also estimated that unless PTTEP starts the production from the Montara field early next year, its net profit in 2010 would fall by 5%.
Komsun Suksumrun, an analyst at Phatra Securities, said as PTTEP has insurance coverage for the cost of cleaning up for the amount of $75 million,the impact on its performance will be minimal.
"The clean-up costs will be covered by insurance while the production capacity of the Montara field is also relatively small compared to the overall production of the company. We would be worried however if the incident could not be contained within the estimated two months, because that would mean the operation will be delayed further to mid-2010," he said.
Despite the bad news, trade of PTTEP shares on the Stock Exchange of Thailand remained brisk, with 1.42 billion baht worth of the shares changed hand yesterday. The shares were up one baht to close at 142 baht.
PTTEP chief executive Anon Sirisaengtaksin said the company has done its best to control the situation and limit the affected area. So far, it has evacuated all 69 crew members working in the fire-risk field.
"The damaged area has been under control. We sprayed dispersant to disperse the spills. The contaminated area is around 30 metres wide and eight nautical miles long," said Mr Anon.
The company has also closely coordinated with the Australian Maritime Safety Authority (AMSA) to limit the damage to the environment and to en-sure safety.
PTTEP had planned earlier to start producing 35,000 barrels of oil a day in December this year from the Montara field, which it acquired from the Australian-based Coogee Resources late last year.
Mr Anon declined to estimate damages of the spill, saying the total costs will depend on how fast the company controls the leak. He said total costs will not exceed the insurance coverage.
"We will seal the leak well by cement blocking after we have the situation under control," he said.
The company expects next year its oil-and-gas production will rise to 300,000 barrels a day from 240,000 barrels estimated in 2009. Part of the additional output will come from the Montara field.
Oil and gas condensate has been leaking from a well at the offshore Montara field in northwest Australia owned by PTT Exploration and Production (PTTEP) since Friday.
Vichitr Kuladejkhuna, an analyst from DBS Vickers Securities, said the incident may cost the company between US$10 to $50 million depending on how well and fast it controls the situation and limits the damages.
"If the damages are in the range between $10-50 million, PTTEP's profit might drop by as much as 6% from this year," said Mr Vichitr.
But a Tisco Securities analyst said the incident will have only a minimal impact on the company since the damage and the costs of clearing up the spills and fixing the leak should be covered by insurance.
"As a result of the accident, the production start-up schedule will be delayed from November this year to around early next year," said Chaipat Thanawattano, deputy head of research Tisco Securities.
"We also estimate that every $10 million of the extra cost from the incident would devalue PTTEP's net assets by 0.1%," he added.
Mr Chaipat also estimated that unless PTTEP starts the production from the Montara field early next year, its net profit in 2010 would fall by 5%.
Komsun Suksumrun, an analyst at Phatra Securities, said as PTTEP has insurance coverage for the cost of cleaning up for the amount of $75 million,the impact on its performance will be minimal.
"The clean-up costs will be covered by insurance while the production capacity of the Montara field is also relatively small compared to the overall production of the company. We would be worried however if the incident could not be contained within the estimated two months, because that would mean the operation will be delayed further to mid-2010," he said.
Despite the bad news, trade of PTTEP shares on the Stock Exchange of Thailand remained brisk, with 1.42 billion baht worth of the shares changed hand yesterday. The shares were up one baht to close at 142 baht.
PTTEP chief executive Anon Sirisaengtaksin said the company has done its best to control the situation and limit the affected area. So far, it has evacuated all 69 crew members working in the fire-risk field.
"The damaged area has been under control. We sprayed dispersant to disperse the spills. The contaminated area is around 30 metres wide and eight nautical miles long," said Mr Anon.
The company has also closely coordinated with the Australian Maritime Safety Authority (AMSA) to limit the damage to the environment and to en-sure safety.
PTTEP had planned earlier to start producing 35,000 barrels of oil a day in December this year from the Montara field, which it acquired from the Australian-based Coogee Resources late last year.
Mr Anon declined to estimate damages of the spill, saying the total costs will depend on how fast the company controls the leak. He said total costs will not exceed the insurance coverage.
"We will seal the leak well by cement blocking after we have the situation under control," he said.
The company expects next year its oil-and-gas production will rise to 300,000 barrels a day from 240,000 barrels estimated in 2009. Part of the additional output will come from the Montara field.
Sunday, August 23, 2009
PTT says oil leak to continue for 50 days
Thailand's PTT Exploration & Production (PTTEP) said it may take at least 50 days to plug an oil and gas spill at its Montara project in the Timor Sea by using another rig to intercept the leak and plug it with mud.
"There is more than one way of potentially controlling the well, however at this stage this is probably our preferred course of action because it is lowest risk and highest probability of success,"PTTEP Australasia Director Jose Martins said in Perth yesterday.
Mobilising the West Triton rig from Singapore to the site will take 20 days,preparation for the drill a further two days, drilling to secure a point above the target another 20 days and intercepting the vector to target and kill the well eight days, he added.
The leak,250km northwest of Australia's Kimberley coast, caused a slick of light oil about 15km long, according to government authorities. Oil, gas and condensate have been seeping from the West Atlas rig, operated by Seadrill, since about 5.30am local time on Aug 21.
A sub-surface leak in a well-bore caused the spill, which is still flowing,Mr Martins said. PTT will pay for the cost of dispersing the slick, he added.
PTT, Thailand's only publicly traded exploration company, acquired the Montara project in February as part of its US$170 million purchase of closely held Coogee Resources. It was expected to start producing about 35,600 barrels of oil a day in the fourth quarter.
International drilling experts arrived in Perth yesterday to help PTT engineers develop a plan to halt the leak.
High volumes of gas around the West Atlas rig and the leaking well, known as H1, are the biggest challenge for engineers, according to Mr Martins.
Aircraft spraying dispersant won't go within 2km of the rig, the Australian Maritime Safety Authority said today.
"What we hope to do is intercept the existing well-bore and at that time pump heavy mud, which is designed to then flow up the H1 well and effectively block it off," Mr Martins said. The procedure has successfully been used previously,he said, without providing an example.
A Singapore-based company has been hired to spray 91,000 litres of seawater a minute on to the West Atlas to disperse the gas and minimise the risk of ignition.
The leak started about 3,500m below the seabed, Mr Martins said. He declined to comment on the chances of the rig catching fire, what caused the leak in the well-bore, how big the size of the hole is, how much oil or gas may be leaking and how much fixing the spill will eventually cost. Australia's Kimberley coast is described by Tourism Australia as one of the world's last true wilderness areas.
"There is more than one way of potentially controlling the well, however at this stage this is probably our preferred course of action because it is lowest risk and highest probability of success,"PTTEP Australasia Director Jose Martins said in Perth yesterday.
Mobilising the West Triton rig from Singapore to the site will take 20 days,preparation for the drill a further two days, drilling to secure a point above the target another 20 days and intercepting the vector to target and kill the well eight days, he added.
The leak,250km northwest of Australia's Kimberley coast, caused a slick of light oil about 15km long, according to government authorities. Oil, gas and condensate have been seeping from the West Atlas rig, operated by Seadrill, since about 5.30am local time on Aug 21.
A sub-surface leak in a well-bore caused the spill, which is still flowing,Mr Martins said. PTT will pay for the cost of dispersing the slick, he added.
PTT, Thailand's only publicly traded exploration company, acquired the Montara project in February as part of its US$170 million purchase of closely held Coogee Resources. It was expected to start producing about 35,600 barrels of oil a day in the fourth quarter.
International drilling experts arrived in Perth yesterday to help PTT engineers develop a plan to halt the leak.
High volumes of gas around the West Atlas rig and the leaking well, known as H1, are the biggest challenge for engineers, according to Mr Martins.
Aircraft spraying dispersant won't go within 2km of the rig, the Australian Maritime Safety Authority said today.
"What we hope to do is intercept the existing well-bore and at that time pump heavy mud, which is designed to then flow up the H1 well and effectively block it off," Mr Martins said. The procedure has successfully been used previously,he said, without providing an example.
A Singapore-based company has been hired to spray 91,000 litres of seawater a minute on to the West Atlas to disperse the gas and minimise the risk of ignition.
The leak started about 3,500m below the seabed, Mr Martins said. He declined to comment on the chances of the rig catching fire, what caused the leak in the well-bore, how big the size of the hole is, how much oil or gas may be leaking and how much fixing the spill will eventually cost. Australia's Kimberley coast is described by Tourism Australia as one of the world's last true wilderness areas.
EGCO CALLS FOR LESS DEPENDENCE ON NATURAL GAS
Thailand should not rely too heavily on natural gas for electricity generation to avoid putting national power security at risk, an energy producer said.
Vinit Tangnoi, president of major private producer Electricity Generating (Egco), said the country should strive for the right balance between natural gas and other sources such as coal in generating the electricity.
According to the Energy Ministry's information, 70 per cent of the 148,790 gigawatt hours of electricity the country produced last year was generated using natural gas.
Of the remainder, 20 per cent was generated by coal, 5 per cent by hydro power, 2 pe rcent by imported fuel, 2 per cent by renewable energy and 1 per cent by other fuel.
Vinit's remarks came in response to recent disruptions in gas supply.
The Energy Ministry reported to the Cabinet last week three instances at the gas fields in the Gulf of Thailand and Burma, which had failed to supply gas to Thailand from August 13 to 18.
The gas-transmission system at A18 field in the Thailand-Malaysia Join Development Area was shut down temporarily for maintenance from August 9 to 19, prompting a drop in gas supply to Thailand from the normal level of 400 million cubic feet per day. The system resumed normal operations on August 19.
There was also a leakage of condensate pipelies in the Bongkoch field in the Gulf of Thailand, prompting a temporary shutdown for inspections. The system has since resumed normal operations.
Also, the Yadana gas field in Burma, which supplies gas to the Kingdom, experienced a technical glitch, prompting a temporary shutdown on August 15. The system has resumed normal operations.
The three instances had prompted the coal-fired power plant of BLCP, in which Egco holds 50 per cent, to run at full capacity to make up for the losses in power output.
Due to the three incidents, the Electricity Generating Authority of Thailand decided to release water from the Srinakarin Dam in Kanchanaburi province in the last two weeks to generate power and avoid a blackout in western Thailand.
This resulted in flooding and the agency said it would take responsibility for the damage.
Earlier, Egat also had expressed concern over the country's heeavy dependence on natural gas in the electricity production.
Seventy per cent of the electricity the country produced last year was generated using natural gas, 20 per cent by coal, 5 per cent by hydro power, 2 per cent by imported fuel, 2 per cent by renewable energy and 1 per cent by other fuel.
Vinit Tangnoi, president of major private producer Electricity Generating (Egco), said the country should strive for the right balance between natural gas and other sources such as coal in generating the electricity.
According to the Energy Ministry's information, 70 per cent of the 148,790 gigawatt hours of electricity the country produced last year was generated using natural gas.
Of the remainder, 20 per cent was generated by coal, 5 per cent by hydro power, 2 pe rcent by imported fuel, 2 per cent by renewable energy and 1 per cent by other fuel.
Vinit's remarks came in response to recent disruptions in gas supply.
The Energy Ministry reported to the Cabinet last week three instances at the gas fields in the Gulf of Thailand and Burma, which had failed to supply gas to Thailand from August 13 to 18.
The gas-transmission system at A18 field in the Thailand-Malaysia Join Development Area was shut down temporarily for maintenance from August 9 to 19, prompting a drop in gas supply to Thailand from the normal level of 400 million cubic feet per day. The system resumed normal operations on August 19.
There was also a leakage of condensate pipelies in the Bongkoch field in the Gulf of Thailand, prompting a temporary shutdown for inspections. The system has since resumed normal operations.
Also, the Yadana gas field in Burma, which supplies gas to the Kingdom, experienced a technical glitch, prompting a temporary shutdown on August 15. The system has resumed normal operations.
The three instances had prompted the coal-fired power plant of BLCP, in which Egco holds 50 per cent, to run at full capacity to make up for the losses in power output.
Due to the three incidents, the Electricity Generating Authority of Thailand decided to release water from the Srinakarin Dam in Kanchanaburi province in the last two weeks to generate power and avoid a blackout in western Thailand.
This resulted in flooding and the agency said it would take responsibility for the damage.
Earlier, Egat also had expressed concern over the country's heeavy dependence on natural gas in the electricity production.
Seventy per cent of the electricity the country produced last year was generated using natural gas, 20 per cent by coal, 5 per cent by hydro power, 2 per cent by imported fuel, 2 per cent by renewable energy and 1 per cent by other fuel.
OIL MARKET OUTLOOK
Crude prices rebounded to above $73 a barrel last week along with gains in stock markets, encouraging US economic indicators and a huge drawdown in US crude stocks. West Texas Intermediate (WTI) closed the week at $73.89 a barrel, up $6.38 from a week earlier. Fridays intraday high of $74.72 was the highest level this year.
Equity and commodity markets received support from optimism about an economic recovery after two US regional manufacturing indices showed growth for the first time in several months. Leading economic indicators also increased for the fourth straight month in July, and existing home sales in July rose to a two-year high. These positive data suggest that economic activity will start to recover soon, along with fuel demand.
Support for crude prices also came from the unexpectedly large drawdown in US crude inventories. Stocks for the week ended Aug 14 dropped by 8.4 million barrels from a week earlier to 342.4 million, prompted by lower imports and higher refinery runs. Crude imports to the US fell 1.4 million bpd to an 11-month low of 8.11 million. A large US stockpile,lower Nigerian crude shipments, and tanker delays due to bad weather in the Gulf of Mexico, caused the significant crude drawdowns. US gasoline and distillate supplies also fell more than expected by 2.1 million and 700,000 barrels respectively to 212.6 and 161 million barrels following a rebound in demand.
Refinery utilisation rose 0.5%toaround 84% of capacity.
The Atlantic hurricane season gained activity during the week.Hurricane Bill, the first of the season,strengthened into Category 4 with winds of 135 mph on Wednesday and headed toward Bermuda and Canadas east coast over the weekend. There were no threats to oil production in the Gulf of Mexico.
This week, crude prices will again track equity markets. Investors will be monitoring US economic reports that include consumer confidence, durable goods orders, new home sales, secondquarter GDP, personal incomes and outlays, and consumer sentiment.Second-quarter GDP for Germany and the UK, as well as Germanys Ifo survey and Eurozone sentiment, will also be watched. More positive data will support crude prices above $70 a barrel. However,downside risks will include short-term profit-taking and a rebound in US crude and product inventories from last weeks sharp declines. Hence, Thaioil estimates that WTI will trade within a range of $70-$75 this week.
Despite gains in crude, gasoline prices in Singapore fell almost $3 last week to close around $81 a barrel. The gasoline market softened from the previous weeks spike, which was caused by unplanned refinery outages. Supplies were seen increasing after refineries in Taiwan resumed operation and India diverted gasoline cargoes from the West into Asia.This week, gasoline will receive support from a refinery outage in Vietnam last Wednesday, with more imports expected to cover the shortfall. Stockpiling in Indonesia and China ahead of holidays in the next few months will also keep the market tighter.
Diesel fell more than $1 last week,settling at $79 a barrel last Friday. The market remained under pressure from weak demand and ample supply. Indonesia and Vietnam, the major importers in Asia, continued to keep imports at low levels, while arbitrage opportunities to move excess supply out of the region remained closed. This lifted diesel and jet fuel stocks in Singapore to record highs. The refinery shutdown in Vietnam is likely to last three weeks and support diesel in the near term.
Thai Oil Plc, www.thaioil.co.th
Equity and commodity markets received support from optimism about an economic recovery after two US regional manufacturing indices showed growth for the first time in several months. Leading economic indicators also increased for the fourth straight month in July, and existing home sales in July rose to a two-year high. These positive data suggest that economic activity will start to recover soon, along with fuel demand.
Support for crude prices also came from the unexpectedly large drawdown in US crude inventories. Stocks for the week ended Aug 14 dropped by 8.4 million barrels from a week earlier to 342.4 million, prompted by lower imports and higher refinery runs. Crude imports to the US fell 1.4 million bpd to an 11-month low of 8.11 million. A large US stockpile,lower Nigerian crude shipments, and tanker delays due to bad weather in the Gulf of Mexico, caused the significant crude drawdowns. US gasoline and distillate supplies also fell more than expected by 2.1 million and 700,000 barrels respectively to 212.6 and 161 million barrels following a rebound in demand.
Refinery utilisation rose 0.5%toaround 84% of capacity.
The Atlantic hurricane season gained activity during the week.Hurricane Bill, the first of the season,strengthened into Category 4 with winds of 135 mph on Wednesday and headed toward Bermuda and Canadas east coast over the weekend. There were no threats to oil production in the Gulf of Mexico.
This week, crude prices will again track equity markets. Investors will be monitoring US economic reports that include consumer confidence, durable goods orders, new home sales, secondquarter GDP, personal incomes and outlays, and consumer sentiment.Second-quarter GDP for Germany and the UK, as well as Germanys Ifo survey and Eurozone sentiment, will also be watched. More positive data will support crude prices above $70 a barrel. However,downside risks will include short-term profit-taking and a rebound in US crude and product inventories from last weeks sharp declines. Hence, Thaioil estimates that WTI will trade within a range of $70-$75 this week.
Despite gains in crude, gasoline prices in Singapore fell almost $3 last week to close around $81 a barrel. The gasoline market softened from the previous weeks spike, which was caused by unplanned refinery outages. Supplies were seen increasing after refineries in Taiwan resumed operation and India diverted gasoline cargoes from the West into Asia.This week, gasoline will receive support from a refinery outage in Vietnam last Wednesday, with more imports expected to cover the shortfall. Stockpiling in Indonesia and China ahead of holidays in the next few months will also keep the market tighter.
Diesel fell more than $1 last week,settling at $79 a barrel last Friday. The market remained under pressure from weak demand and ample supply. Indonesia and Vietnam, the major importers in Asia, continued to keep imports at low levels, while arbitrage opportunities to move excess supply out of the region remained closed. This lifted diesel and jet fuel stocks in Singapore to record highs. The refinery shutdown in Vietnam is likely to last three weeks and support diesel in the near term.
Thai Oil Plc, www.thaioil.co.th
PTT-OPERATED RIG SPEWS OIL SLICK IN REMOTE TIMOR SEA
Australia mobilised aircraft yesterday to try to break up an oil slick off its northwestern coast as it struggled to stop a well gushing oil into the sea.
The source of the spill is an offshore rig in the Timor Sea operated by PTTEP Australasia, a unit of Thailand's PTT Exploration and Production.
The Australian Maritime Safety Authority (Amsa) said 50 tonnes of dispersant were being prepared to try and contain the spill. A C-130 Hercules aircraft was flown in from Singapore, and two back-up aircraft readied.
"This leak has occurred in one of the remotest locations possible, making any operation difficult," Amsa, the agency coordinating the clean-up operation,said. It was too early to determine the full impact of the spill, the agency added.
Rig operator PTTEP Australasia has said 40 barrels of oil leaked in the initial incident on Friday.
However, the well was still gushing oil yesterday and emergency services said stopping it was a priority.
"Amsa is working with the company and has stressed the urgency to repair the well head and stop the oil flow and PTTEP has initiated actions to achieve this," the agency said.
Amsa spokeswoman Tracey Jiggins said the slick was about eight nautical miles in length and about 30m wide,and appeared to have stabilised in size,suggesting the oil was evaporating at about the same rate it was leaking.
Aerial surveys had been made to prepare for spraying the dispersant.
A senior PTTEP Australasia company official said a team of experts had been engaged to figure out how to stop the flow of oil, but at present it was too dangerous to send people back on the rig. The company offered to pay all the clean-up costs and promised to minimise the environmental impact.
The source of the spill is an offshore rig in the Timor Sea operated by PTTEP Australasia, a unit of Thailand's PTT Exploration and Production.
The Australian Maritime Safety Authority (Amsa) said 50 tonnes of dispersant were being prepared to try and contain the spill. A C-130 Hercules aircraft was flown in from Singapore, and two back-up aircraft readied.
"This leak has occurred in one of the remotest locations possible, making any operation difficult," Amsa, the agency coordinating the clean-up operation,said. It was too early to determine the full impact of the spill, the agency added.
Rig operator PTTEP Australasia has said 40 barrels of oil leaked in the initial incident on Friday.
However, the well was still gushing oil yesterday and emergency services said stopping it was a priority.
"Amsa is working with the company and has stressed the urgency to repair the well head and stop the oil flow and PTTEP has initiated actions to achieve this," the agency said.
Amsa spokeswoman Tracey Jiggins said the slick was about eight nautical miles in length and about 30m wide,and appeared to have stabilised in size,suggesting the oil was evaporating at about the same rate it was leaking.
Aerial surveys had been made to prepare for spraying the dispersant.
A senior PTTEP Australasia company official said a team of experts had been engaged to figure out how to stop the flow of oil, but at present it was too dangerous to send people back on the rig. The company offered to pay all the clean-up costs and promised to minimise the environmental impact.
Friday, August 21, 2009
Oil hovers near $73 amid mixed US economic data
Oil prices hovered near $73 a barrel yesterday in Asia as mixed economic data from the US point to a slow recovery.
Benchmark crude for October delivery was down 31 cents to $72.60 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. On Thursday, the contract fell 92 cents to settle at $72.91.
The Se ptember contract, which expired Thursday, advanced 12 cents to end at $72.54.
Investors are mulling news that suggests US consumption remains weak as the economy recovers from recession.
The Labour Department on Thursday said the number of first-time unemployment claims rose unexpectedly for the second straight week. And the Mortgage Bankers Association said more than 13% of homeowners with a mortgage are either behind on their payments or in foreclosure.
"There are no real signs that consumption in the US is picking up,' said Ben Westmore, energy analyst with National Australia Bank in Melbourne."Until we see that, investors won't be assured that the recovery is imminent."
Investors were cheered earlier this week when the Energy Information Administration said crude in storage fell by 8.4 million barrels last week, suggesting demand could be improving.
On Thursday, the Philadelphia Federal Reser ve said factor y activity in the mid-Atlantic region jumped back into positive territory in August, reaching its highest level since November 2007.
Meanwhile, the Conference Board's economic forecasting gauge, the Index of Leading Economic Indicators, rose for the fourth straight month during July.
'The data is quite volatile," Westmore said. "If we see more inventory draws,oil could break through the $75 a barrel mark."
In other Nymex trading, gasoline for September delivery rose 0.89 cent to $1.99 a gallon and heating oil was steady at $1.88. Natural gas for September delivery held at $2.94 per 1,000 cubic feet.
In London, Brent prices fell 7 cents to $73.26 a barrel on the ICE Futures exchange.
Later yesterday, traders will focus on a speech by Federal Reserve chief Ben Bernanke after recent mostly positive data in the United States _which is the world's biggest energy consuming nation.
The Conference Board, a US business research firm, said Thursday its leading economic index rose for the fourth straight month in July.
The Federal Reserve index of the m anufacturing sector in the Philadelphia,Pennsylvania region turned positive in August, its highest level since November 2007, the month prior to the economy's official entry into recession.
Benchmark crude for October delivery was down 31 cents to $72.60 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. On Thursday, the contract fell 92 cents to settle at $72.91.
The Se ptember contract, which expired Thursday, advanced 12 cents to end at $72.54.
Investors are mulling news that suggests US consumption remains weak as the economy recovers from recession.
The Labour Department on Thursday said the number of first-time unemployment claims rose unexpectedly for the second straight week. And the Mortgage Bankers Association said more than 13% of homeowners with a mortgage are either behind on their payments or in foreclosure.
"There are no real signs that consumption in the US is picking up,' said Ben Westmore, energy analyst with National Australia Bank in Melbourne."Until we see that, investors won't be assured that the recovery is imminent."
Investors were cheered earlier this week when the Energy Information Administration said crude in storage fell by 8.4 million barrels last week, suggesting demand could be improving.
On Thursday, the Philadelphia Federal Reser ve said factor y activity in the mid-Atlantic region jumped back into positive territory in August, reaching its highest level since November 2007.
Meanwhile, the Conference Board's economic forecasting gauge, the Index of Leading Economic Indicators, rose for the fourth straight month during July.
'The data is quite volatile," Westmore said. "If we see more inventory draws,oil could break through the $75 a barrel mark."
In other Nymex trading, gasoline for September delivery rose 0.89 cent to $1.99 a gallon and heating oil was steady at $1.88. Natural gas for September delivery held at $2.94 per 1,000 cubic feet.
In London, Brent prices fell 7 cents to $73.26 a barrel on the ICE Futures exchange.
Later yesterday, traders will focus on a speech by Federal Reserve chief Ben Bernanke after recent mostly positive data in the United States _which is the world's biggest energy consuming nation.
The Conference Board, a US business research firm, said Thursday its leading economic index rose for the fourth straight month in July.
The Federal Reserve index of the m anufacturing sector in the Philadelphia,Pennsylvania region turned positive in August, its highest level since November 2007, the month prior to the economy's official entry into recession.
Thursday, August 20, 2009
Oil holds above $72 after big US crude drawdown
Oil prices held above $72 yesterday in Asia after jumping the previous day on an unexpected fall in US crude inventories.
Benchmar k crude for September delivery was down 9 cents to $72.33 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange.
On Wednesday, the contract jumped $3.23 to settle at $72.42 after the Energy Information Administration said crude in storage fell by 8.4 million barrels last week. Gasoline held in storage fell as well.
Analysts expected the EIA numbers to gain 1.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The drawdown of crude supplies suggests demand may be improving as the US economy recovers from a severe recession.
' The outlook for the US economy looks pretty strong," Christoffer MoltkeLeth, head of sales trading at Saxo Capital Markets in Singapore. 'We expect a recovery in the second half, and that helps crude."
Oil prices will likely test $75 a barrel soon, Moltke-Leth said.
'A moderate recovery is more or less discounted at this price level,' he said."We would have to see signs that it's a Vshaped recovery to be able to take prices a step higher."
In other Nymex trading, gasoline for September delivery was steady at $2.04 a gallon and heating oil held at $1.92.Natural gas for September deliver y added 1.9 cents to $3.14 per 1,000 cubic feet.
In London, Brent prices fell 43 cents to $74.16 a barrel on the ICE Futures exchange.
Despite New York crude turning higher in afternoon trade, analysts said market sentiment re mains weighed down by weak US energy demand.
Data released by the US Department of Energy (DoE) Wednesday showed distillate stocks at 27-year highs.
"There's these huge overhangs with middle distillates... Distillate stocks are still extremely bloated," said Jason Feer,Asia Pacific general manager of energy market analysts Argus Media in Singapore.
Distillates, which include diesel and heating fuel, fell 700,000 barrels last week whereas analysts had pencilled in a gain of 500,000 barrels, but Feer said volumes were 'still 15% to 20% above last year."
He added that high levels of distillate stocks indicated "economic growth is still quite sluggish."
However, there was a decline in crude inventories, which fell by a massive 8.4 million barrels last week, snapping a three-week run of gains.
The market had expected an increase of 1.5 million barrels.
Benchmar k crude for September delivery was down 9 cents to $72.33 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange.
On Wednesday, the contract jumped $3.23 to settle at $72.42 after the Energy Information Administration said crude in storage fell by 8.4 million barrels last week. Gasoline held in storage fell as well.
Analysts expected the EIA numbers to gain 1.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The drawdown of crude supplies suggests demand may be improving as the US economy recovers from a severe recession.
' The outlook for the US economy looks pretty strong," Christoffer MoltkeLeth, head of sales trading at Saxo Capital Markets in Singapore. 'We expect a recovery in the second half, and that helps crude."
Oil prices will likely test $75 a barrel soon, Moltke-Leth said.
'A moderate recovery is more or less discounted at this price level,' he said."We would have to see signs that it's a Vshaped recovery to be able to take prices a step higher."
In other Nymex trading, gasoline for September delivery was steady at $2.04 a gallon and heating oil held at $1.92.Natural gas for September deliver y added 1.9 cents to $3.14 per 1,000 cubic feet.
In London, Brent prices fell 43 cents to $74.16 a barrel on the ICE Futures exchange.
Despite New York crude turning higher in afternoon trade, analysts said market sentiment re mains weighed down by weak US energy demand.
Data released by the US Department of Energy (DoE) Wednesday showed distillate stocks at 27-year highs.
"There's these huge overhangs with middle distillates... Distillate stocks are still extremely bloated," said Jason Feer,Asia Pacific general manager of energy market analysts Argus Media in Singapore.
Distillates, which include diesel and heating fuel, fell 700,000 barrels last week whereas analysts had pencilled in a gain of 500,000 barrels, but Feer said volumes were 'still 15% to 20% above last year."
He added that high levels of distillate stocks indicated "economic growth is still quite sluggish."
However, there was a decline in crude inventories, which fell by a massive 8.4 million barrels last week, snapping a three-week run of gains.
The market had expected an increase of 1.5 million barrels.
Exxon shifts its focus to natural gas
Exxon Mobil may be synonymous with Big Oil, but two major deals announced this month show the company is focused on expanding natural-gas output.
On Tuesday, Exxon said it had reached a 20-year agreement to provide liquefied natural gas to PetroChina Co, Asia's largest oil and gas company, from the yet-to-be developed Gorgon gas field off Australia's far northwest coast. The deal is estimated to be worth $41 billion over the length of the pact, though production could be a few years off.
Exxon, the world's biggest publicly traded oil company, earlier signed a 20-year agreement to supply LNG from Gorgon to Petronet LNG Ltd, a major Indian gas importer.
The contracts give a big lift to the Gorgon project, which is being developed by Australian units of Exxon and rivals Chevron Corp and Royal Dutch Shell PLC. Shell and Exxon each have a 25%stake, while Chevron holds 50%.
With the PetroChina contract, Exxon has essentially secured sources for all its potential production from Gorgon,said Lysle Brinker, an industry analyst with IHS Herold.
Brinker noted that developments like Gorgon "are becoming increasingly important to majors like Exxon as they find it more difficult to tap new sources of crude and increase production."
Most of the world's oil reserves are held tightly by state-run, national oil companies.
"The big guys need big projects like this," Brinker said."The world has changed, and Australia is a big area for the Western (oil companies.) This is the type of project they need to maintain volume growth over the long term."
The Gorgon development is expected to pump up to 15 million tonnes of LNG per year when it achieves full production.The deal still requires final regulatory approval, but the government signaled on Wednesday it was unlikely to be opposed on foreign investment or environmental grounds. A final decision is expected next month.
Because that decision hasn't been made, Exxon declined to give specifics on its potential investment or say when production might begin.
LNG is gas that's cooled to a liquid so it can be transported in large tankers to terminals, where it's warmed back into a gas and shipped through pipelines for use as fuel.
A glut of natural gas and LNG projects around the world is expected to keep supplies of the cleaner-burning fuel high and prices low for the next few years.Amid the dismal global economy and weak energy demand, natural gas prices have fallen from double-digit levels a year ago to around $3.10 per 1,000 cubic feet. Still, because of demand in Asia and other reasons, analysts say they expect to see big producers continue to invest in natural-gas projects. At present,Exxon's proved reserves stand at about 22.8 billion barrels - half of which is oil and half gas.
"With all the new technology, natural gas is getting easier to find," said Brian Youngberg, an analyst with Edward Jones."And demand is going to continue to grow in Asia. So all these companies are looking for new properties, and Australia is kind of the hot area right now."
Said Brinker:"There are growing economies that will need more and more energy, and natural gas is going to be picking up a big chunk of that energy consumption growth, especially in the Asia-Pacific Rim."
On Tuesday, Exxon said it had reached a 20-year agreement to provide liquefied natural gas to PetroChina Co, Asia's largest oil and gas company, from the yet-to-be developed Gorgon gas field off Australia's far northwest coast. The deal is estimated to be worth $41 billion over the length of the pact, though production could be a few years off.
Exxon, the world's biggest publicly traded oil company, earlier signed a 20-year agreement to supply LNG from Gorgon to Petronet LNG Ltd, a major Indian gas importer.
The contracts give a big lift to the Gorgon project, which is being developed by Australian units of Exxon and rivals Chevron Corp and Royal Dutch Shell PLC. Shell and Exxon each have a 25%stake, while Chevron holds 50%.
With the PetroChina contract, Exxon has essentially secured sources for all its potential production from Gorgon,said Lysle Brinker, an industry analyst with IHS Herold.
Brinker noted that developments like Gorgon "are becoming increasingly important to majors like Exxon as they find it more difficult to tap new sources of crude and increase production."
Most of the world's oil reserves are held tightly by state-run, national oil companies.
"The big guys need big projects like this," Brinker said."The world has changed, and Australia is a big area for the Western (oil companies.) This is the type of project they need to maintain volume growth over the long term."
The Gorgon development is expected to pump up to 15 million tonnes of LNG per year when it achieves full production.The deal still requires final regulatory approval, but the government signaled on Wednesday it was unlikely to be opposed on foreign investment or environmental grounds. A final decision is expected next month.
Because that decision hasn't been made, Exxon declined to give specifics on its potential investment or say when production might begin.
LNG is gas that's cooled to a liquid so it can be transported in large tankers to terminals, where it's warmed back into a gas and shipped through pipelines for use as fuel.
A glut of natural gas and LNG projects around the world is expected to keep supplies of the cleaner-burning fuel high and prices low for the next few years.Amid the dismal global economy and weak energy demand, natural gas prices have fallen from double-digit levels a year ago to around $3.10 per 1,000 cubic feet. Still, because of demand in Asia and other reasons, analysts say they expect to see big producers continue to invest in natural-gas projects. At present,Exxon's proved reserves stand at about 22.8 billion barrels - half of which is oil and half gas.
"With all the new technology, natural gas is getting easier to find," said Brian Youngberg, an analyst with Edward Jones."And demand is going to continue to grow in Asia. So all these companies are looking for new properties, and Australia is kind of the hot area right now."
Said Brinker:"There are growing economies that will need more and more energy, and natural gas is going to be picking up a big chunk of that energy consumption growth, especially in the Asia-Pacific Rim."
Kiattana Transport to list on MAI on September 18
Kiattana Transport, a specialist in carrying petrochemicals and dangerous substances, will raise capital for expansion in neighbouring countries by listing on the Market for Alternative Investmetn on September 18.
"We're looking for new areas of services and marketswhere there is potential for growth," managing director Kiatichai Monsereenusorn said yesterday.
The proceeds from selling 40 million inital public offering (IPO)shares at a par valre of Bt1 apiece will be used for extending the company's transport and logistics services,especially to Vietnam from Laos and Cambodia, which it already serves, as well as for working capital.
The company also has high hopes the listing will help it increase and diversify its customer base.
The IPO will raise its paid-up capital from Bt160 billion to Bt200 million.
Kiattana, which has relied on only two clients for half of its business-Padaeng Industry and Vinythai-has tried to seek more clients to reduce its risk from cancellations by those clients. Now ithas succeeded in lowerin sales from major clients to 38 per cent of total sales, from 49 per cent last year.
Kiatichai said wholly owned subsidiary Chemtrans would help diversifty its parent's customer base away from large clients. This is not cannibalism, because Chemtrans's clientele, focusing on fuel and energy products, is different from that of its parent.
Chemtrans this year has started delivering natural gas for vehicles (NGV)to a major producer."There is potential for growth in NGV transport services, because of higher demand from the transport sector buoyed by the rising price of crude and refined oil,"he said.
Part of the company's policy is to support PTT's expansion plan for NGV stations in Bangkok and upcountry, from 303 now to 400 this year and 595 in 2012. This will be an opportunity for the company to grow.
Kiattana provides complete transportation services for zinc, heavy metal, chemicals and dangerous goods with a fleet of more than 300 venhicles, including 10-and 22-wheel lorries, trailers and rescue lorries.
It also links its six regional branches in Rayong, Ayutthaya, Kamphaeng Phet, Samut Prakan, Saraburi and Tak provinces to the head office in Bangkok with an advanced online system.
"We're looking for new areas of services and marketswhere there is potential for growth," managing director Kiatichai Monsereenusorn said yesterday.
The proceeds from selling 40 million inital public offering (IPO)shares at a par valre of Bt1 apiece will be used for extending the company's transport and logistics services,especially to Vietnam from Laos and Cambodia, which it already serves, as well as for working capital.
The company also has high hopes the listing will help it increase and diversify its customer base.
The IPO will raise its paid-up capital from Bt160 billion to Bt200 million.
Kiattana, which has relied on only two clients for half of its business-Padaeng Industry and Vinythai-has tried to seek more clients to reduce its risk from cancellations by those clients. Now ithas succeeded in lowerin sales from major clients to 38 per cent of total sales, from 49 per cent last year.
Kiatichai said wholly owned subsidiary Chemtrans would help diversifty its parent's customer base away from large clients. This is not cannibalism, because Chemtrans's clientele, focusing on fuel and energy products, is different from that of its parent.
Chemtrans this year has started delivering natural gas for vehicles (NGV)to a major producer."There is potential for growth in NGV transport services, because of higher demand from the transport sector buoyed by the rising price of crude and refined oil,"he said.
Part of the company's policy is to support PTT's expansion plan for NGV stations in Bangkok and upcountry, from 303 now to 400 this year and 595 in 2012. This will be an opportunity for the company to grow.
Kiattana provides complete transportation services for zinc, heavy metal, chemicals and dangerous goods with a fleet of more than 300 venhicles, including 10-and 22-wheel lorries, trailers and rescue lorries.
It also links its six regional branches in Rayong, Ayutthaya, Kamphaeng Phet, Samut Prakan, Saraburi and Tak provinces to the head office in Bangkok with an advanced online system.
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