Oil prices rose above $67 a barrel yesterday in Asia despite an increase in US crude inventories for a third week, which suggests consumer demand remains weak.
Benchmark crude for November delivery was up 42 cents at $67.13 by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. The contract fell 13 cents to settle at $66.71 on Tuesday.
US oil inventories rose last week, the American Petroleum Institute said late Tuesday. Crude stocks increased 2.8 million barrels while analysts had expected a jump of 2.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
"There's no doubt that we still have very high levels of inventories, and that's probably going to prevent oil fr om breaking above $75," said Christoffer Moltke-Leth, head of sales trading at Saxo Capital Markets in Singapore.
Oil has traded between $65 and $75 for months as investors mull the strength of a global recover y from recession.Crude bounced off the $65 level earlier this week.
"The support we saw at $65 was quite significant," Moltke-Leth said. "The hope for recovery is still pretty strong, and that's what's holding prices up."
In other Nymex trading, heating oil rose 0.94 cent to $1.71 a gallon. Gasoline for October delivery gained 2.59 cents to $1.65 a gallon.
In London, oil prices rose slightly yesterday as traders awaited the weekly US energy inventories report, analysts said.
New York's main contract, light sweet crude for November delivery, added 48 cents to 67.19 dollars a barrel.
Brent North Sea crude for November delivery gained 42 cents to 65.91 dollars a barrel.
"Today, all focus will be on the weekly US fuel inventories data," said VTB Capital analyst Andrey Kryuchenkov.
"We expect a small rise in US crude stockpiles, while product stockpiles might see another week of significant inventory builds."
Later on Wednesday, the US government's Department of Energy will release its weekly oil inventory report.
Analysts polled by Dow Jones Newswires expect crude stocks to have risen by 300,000 barrels in the past week.
Gasoline stocks are tipped to increase by 800,000 barrels while distillate stocks, which include heating oil and diesel, are seen to rise by 1.1 million barrels.
Wednesday, September 30, 2009
POLITICS HOLDING BACK THAI RECOVERY
Corporate giants yesterday warned the government that continued political unrest was acting as a major drag on the country's economic growth while the rest of Asia powers ahead in the world arena.
The global economy is entering into a show of economic rebound but the recovery will take two years to be seen, they said.
However, there are some good signs for the local economy.
Interest rates will not be raised until late next year, oil prices will not fluctuate like in the past few years, and the government's second stimulus package will disburse Bt190 billion-Bt200 billion of the total Bt1.43 trillion next year to enhance domestic consumption.
In particular, the emergence of new economic powers, including China and India, has prompted developed countries, including the US and those in the European Union, to move trade and investment to Asia. They believe Asia will be the first region to overcome the global financial paralysis.
Panellists at a seminar in Bangkok on the "Global Trading Outlook 2010" pointed out that international trade is driving the country's economy.
The government should prepare measures to create networks to take advantage of the seamless trade through free-trade agreements, they said.
Charumporn Chotikasatien, a vice president at Siam Commercial Bank, said the five major growth engines next year would be agriculture, manufacturing and manufacturing-related services, hotels and restaurants, transportation and other services.
No factors have come into view on the horizon to force the government to raise interest rates.
"Consumers will enjoy low interest rates until the end of next year," he said.
However, the stronger baht against the greenback will hurt all exports. It is the result of capital inflows from the West to Asia, the world's main manufacturing belt. This shift will pull up Asia from the crisis before other regions.
As businessmen venture to new potential markets abroad, particularly the Middle East, the bank plans follow them to serve their new operations.
"Exploring new export markets calls for risk insurance. The government should take care of the transactions and commercial banks will facilitate the export letters of credit," he said.
Surong Bulakul, senior executive vice president for international trading at PTT, said the worldwide slump had dampened both oil consumption and price speculation.
The Organisation of Petroleum Exporting Countries is also afraid that the serious concerns over global warming will make the international community more aware of alternative energy, electric cars and hydrogen power.
"Opec is worried about the security of oil demand, which cautions them not to do anything to pull up the price and to stabilise production," he said.
The oil price is also closely related to the geopolitical situation, but now there are no negative factors to push up prices.
PTT predicts that the crude-oil price will average US$75 (Bt2,500) per barrel this year.
Kalin Sarasin, managing director of SCT, said traders had to keep a close eye on major factors, particularly the political situation, government spending, international cooperation through free-trade agreements and the G-20, and diverse global market opportunities.
China and India will be spotlighted in global trading next year. China's economy is predicted to grow by 8 per cent and investments in property and corporations are rising as exports take up the slack from weakening government investment.
India's government spending will increase by 36 per cent next year, focusing on infrastructure, job creation and improving the livelihood of the poor.
The business risk factors include fluctuating commodity prices, unstable exchange rates, political unrest, credit risk and the high risk of entering into new markets, he said.
Sumate Tanthuwanit, president of leading logistics operator Ngow Hock Agency, said the top 10 shippers had faced a combined loss of about $3 billion since the collapse of Lehman Brothers in September last year. They will not reduce service fees but will increase them to survive.
Container demand has dropped by 9.14 per cent from a year ago. Demand is expected to increase by 2.25 per cent but the supply of ships will shoot up by 15 per cent next year, he added.
The global economy is entering into a show of economic rebound but the recovery will take two years to be seen, they said.
However, there are some good signs for the local economy.
Interest rates will not be raised until late next year, oil prices will not fluctuate like in the past few years, and the government's second stimulus package will disburse Bt190 billion-Bt200 billion of the total Bt1.43 trillion next year to enhance domestic consumption.
In particular, the emergence of new economic powers, including China and India, has prompted developed countries, including the US and those in the European Union, to move trade and investment to Asia. They believe Asia will be the first region to overcome the global financial paralysis.
Panellists at a seminar in Bangkok on the "Global Trading Outlook 2010" pointed out that international trade is driving the country's economy.
The government should prepare measures to create networks to take advantage of the seamless trade through free-trade agreements, they said.
Charumporn Chotikasatien, a vice president at Siam Commercial Bank, said the five major growth engines next year would be agriculture, manufacturing and manufacturing-related services, hotels and restaurants, transportation and other services.
No factors have come into view on the horizon to force the government to raise interest rates.
"Consumers will enjoy low interest rates until the end of next year," he said.
However, the stronger baht against the greenback will hurt all exports. It is the result of capital inflows from the West to Asia, the world's main manufacturing belt. This shift will pull up Asia from the crisis before other regions.
As businessmen venture to new potential markets abroad, particularly the Middle East, the bank plans follow them to serve their new operations.
"Exploring new export markets calls for risk insurance. The government should take care of the transactions and commercial banks will facilitate the export letters of credit," he said.
Surong Bulakul, senior executive vice president for international trading at PTT, said the worldwide slump had dampened both oil consumption and price speculation.
The Organisation of Petroleum Exporting Countries is also afraid that the serious concerns over global warming will make the international community more aware of alternative energy, electric cars and hydrogen power.
"Opec is worried about the security of oil demand, which cautions them not to do anything to pull up the price and to stabilise production," he said.
The oil price is also closely related to the geopolitical situation, but now there are no negative factors to push up prices.
PTT predicts that the crude-oil price will average US$75 (Bt2,500) per barrel this year.
Kalin Sarasin, managing director of SCT, said traders had to keep a close eye on major factors, particularly the political situation, government spending, international cooperation through free-trade agreements and the G-20, and diverse global market opportunities.
China and India will be spotlighted in global trading next year. China's economy is predicted to grow by 8 per cent and investments in property and corporations are rising as exports take up the slack from weakening government investment.
India's government spending will increase by 36 per cent next year, focusing on infrastructure, job creation and improving the livelihood of the poor.
The business risk factors include fluctuating commodity prices, unstable exchange rates, political unrest, credit risk and the high risk of entering into new markets, he said.
Sumate Tanthuwanit, president of leading logistics operator Ngow Hock Agency, said the top 10 shippers had faced a combined loss of about $3 billion since the collapse of Lehman Brothers in September last year. They will not reduce service fees but will increase them to survive.
Container demand has dropped by 9.14 per cent from a year ago. Demand is expected to increase by 2.25 per cent but the supply of ships will shoot up by 15 per cent next year, he added.
SGP TO SNAP UP COGEL FROM CHEVRON CHINA
Siam Gas and Petrochemicals (SGP) has signed a deal for 99-per-cent ownership of Chinesebased Chevron Ocean Gas & Energy (Cogel) from Chevron China for BT1.7 billion.
The move is part of efforts to enhance its business and expand its sources of revenue.
In a filing yesterday with the Stock Exchange of Thailand, SGP said its board on September 17 passed a resolution approving the purchase by SGP's wholly owned Siamgas HK subsidiary.
SGP assigned managing director Supachai Weeraborwornpong to sign the agreement with Chevron China on behalf of Siamgas HK and SGP, which he did on Tuesday.
APPROVAL NEEDED
Completion of the transaction is subject to certain conditions, including approval by the Chinese authorities.
Supachai said the share acquisition would be completed next year.
SGP will use its working capital to pay for the shares. It will loan Bt350 million to Siamgas HK, while Siamgas KH will increase its capital by selling shares to SGP to raise the remaining Bt1.35 billion neede to buy the shares.
SGP meanwhile will use its own cash flow and retained earnings totalling Bt1.9 billion to buy capital-increase shares in Siamgas HK.
Supachai said taking over Cogel would help boost SGP's gas sales by an additional 480,000 tonnes a year from the normal 1 million tonnes now and that the company expected to break even on the deal within six years.
The takeover will also facilitate its plan to expand further into the Southeast Asian and Chinese markets, he sid.
He insisted the deal would not affect SGP's dividend payments.
Cogel is a major supplier of liquefied petroleum gas (LPG) in China, which has policy of promoting LPG use.
Supachai is confident Cogel will turn a profit under the SGP umbrella. He said Cogel had accumulated losses of Bt4.7 billion after Chevron China gradually reduced its investment in the company in a bid to move away from the LPG business.
He said sGP was in no hurry to reverse Cogel's losses, given that they meant a waiver of Chinese corporate tax.
He said despite the acquisition, SGP would not revise its revenue forecast for this year. It still targets growth of more than 15 per cent in both revenue and net profit on signs of economic recovery and rising gas demand.
The company's net profit rose 30 per cent year on year in the first quarter and 5 per cent year on year in the second quarter.
SGP closed at Bt8.40 yesterday, up 0.6 per cent from the day before.
The move is part of efforts to enhance its business and expand its sources of revenue.
In a filing yesterday with the Stock Exchange of Thailand, SGP said its board on September 17 passed a resolution approving the purchase by SGP's wholly owned Siamgas HK subsidiary.
SGP assigned managing director Supachai Weeraborwornpong to sign the agreement with Chevron China on behalf of Siamgas HK and SGP, which he did on Tuesday.
APPROVAL NEEDED
Completion of the transaction is subject to certain conditions, including approval by the Chinese authorities.
Supachai said the share acquisition would be completed next year.
SGP will use its working capital to pay for the shares. It will loan Bt350 million to Siamgas HK, while Siamgas KH will increase its capital by selling shares to SGP to raise the remaining Bt1.35 billion neede to buy the shares.
SGP meanwhile will use its own cash flow and retained earnings totalling Bt1.9 billion to buy capital-increase shares in Siamgas HK.
Supachai said taking over Cogel would help boost SGP's gas sales by an additional 480,000 tonnes a year from the normal 1 million tonnes now and that the company expected to break even on the deal within six years.
The takeover will also facilitate its plan to expand further into the Southeast Asian and Chinese markets, he sid.
He insisted the deal would not affect SGP's dividend payments.
Cogel is a major supplier of liquefied petroleum gas (LPG) in China, which has policy of promoting LPG use.
Supachai is confident Cogel will turn a profit under the SGP umbrella. He said Cogel had accumulated losses of Bt4.7 billion after Chevron China gradually reduced its investment in the company in a bid to move away from the LPG business.
He said sGP was in no hurry to reverse Cogel's losses, given that they meant a waiver of Chinese corporate tax.
He said despite the acquisition, SGP would not revise its revenue forecast for this year. It still targets growth of more than 15 per cent in both revenue and net profit on signs of economic recovery and rising gas demand.
The company's net profit rose 30 per cent year on year in the first quarter and 5 per cent year on year in the second quarter.
SGP closed at Bt8.40 yesterday, up 0.6 per cent from the day before.
Map Ta Phut ruling hits SET
Share prices of companies in the networks of PTT Plc and Siam Cement Group fell in a range of 1% to 7% during trading yesterday as the country's leading industrial conglomerates faced a new blow over unsettled pollution problems at Map Ta Phut.
Among the 76 projects worth 400 billion baht ordered to halt construction by the Administrative Court on Tuesday,25 are being developed by subsidiaries and affiliates of PTT, said PTT chief financial officer Tevin Vongvanich.
These ongoing projects include a sixth gas separation plant, due to be operational by the end of this year,petrochemical plants, and an upgraded refinery to meet Euro 4 emission standards.
The court ordered the suspension of operating permits for new investments in Map Ta Phut Industrial Estate in Rayong, following an outcry from environmental activists and residents who claim the permits violated Section 67 of the 2007 Constitution.
"The (temporary) suspension of these projects will affect our trading and contract partners, financial institutions, and related industries across the supply chain. Moreover, it will put at risk over 100,000 jobs, including hiring in [Map Ta Phut]," Mr Tevin said.
"We are planning to hold talks with concerned government agencies to seek ways to soften the impact from the court's ruling, or we may lodge an appeal."
Siam Cement said the court order would force its wholly owned subsidiary,SCG Chemicals, to halt nearly completed construction of its upstream naphtha cracker, as well as projects of its downstream subsidiaries and joint-venture units, expected to be completed between late 2009 to mid-2011.
"In this regard, SCC will be working closely with all relevant government authorities to jointly conclude a solution for all concerned parties, while minimising any effect on SCG Chemicals'investment projects," president and chief executive Kan Trakulhoon said in a statement to the Stock Exchange of Thailand yesterday.
Also affected is SET-listed Glow Energy, whose 660-megawatt power plant is likely to be postponed.
Kim Eng Securities said the court was expected to review the case immediately when an appeal is lodged.
"This issue cannot drag on for long because it will affect the sentiment of the stock market in general," said a Kim Eng spokesman.
However, Bualuang Securities said the court ruling was unlikely to push the overall index down even though it caused a sudden shock.
"This news represents a negative
surprise and is certainly a near-term headwind against the stock of any company with facilities in or near Map Ta Phut," Bualuang said.
Surong Bualakula, senior executive vice-president for the international business unit of PTT, said Thailand's competitiveness had been crimped by the Map Ta Phut case.
The development could prompt PTT to look at neighbouring countries such as Cambodia, which has larger natural gas and oil reserves, as well as a pipeline network. The Cambodian government is considering a plan to build an energy complex in Sihanoukville, he said.
"Map Ta Phut is the centre of Thailand's industrial development region with a competitive advantage in the gas-based petrochemical industry," Mr Surong said."What downstream manufacturers or automakers will invest in Thailand now because they cannot be sure if they will have enough raw materials in the future?"
Shares of Siam Cement (SCC) closed yesterday at 222 baht, down 5 baht, in trade worth 1.11 billion. PTT shares rose 3 baht, but PTTAR fell 1.10 baht to 24.40 in trade worth 1.7 billion while PTTCH fell 4 baht to 73.25 in trade worth 844 million. GLOW fell 1.75 baht to 32.75 in trade worth 135 million.
Among the 76 projects worth 400 billion baht ordered to halt construction by the Administrative Court on Tuesday,25 are being developed by subsidiaries and affiliates of PTT, said PTT chief financial officer Tevin Vongvanich.
These ongoing projects include a sixth gas separation plant, due to be operational by the end of this year,petrochemical plants, and an upgraded refinery to meet Euro 4 emission standards.
The court ordered the suspension of operating permits for new investments in Map Ta Phut Industrial Estate in Rayong, following an outcry from environmental activists and residents who claim the permits violated Section 67 of the 2007 Constitution.
"The (temporary) suspension of these projects will affect our trading and contract partners, financial institutions, and related industries across the supply chain. Moreover, it will put at risk over 100,000 jobs, including hiring in [Map Ta Phut]," Mr Tevin said.
"We are planning to hold talks with concerned government agencies to seek ways to soften the impact from the court's ruling, or we may lodge an appeal."
Siam Cement said the court order would force its wholly owned subsidiary,SCG Chemicals, to halt nearly completed construction of its upstream naphtha cracker, as well as projects of its downstream subsidiaries and joint-venture units, expected to be completed between late 2009 to mid-2011.
"In this regard, SCC will be working closely with all relevant government authorities to jointly conclude a solution for all concerned parties, while minimising any effect on SCG Chemicals'investment projects," president and chief executive Kan Trakulhoon said in a statement to the Stock Exchange of Thailand yesterday.
Also affected is SET-listed Glow Energy, whose 660-megawatt power plant is likely to be postponed.
Kim Eng Securities said the court was expected to review the case immediately when an appeal is lodged.
"This issue cannot drag on for long because it will affect the sentiment of the stock market in general," said a Kim Eng spokesman.
However, Bualuang Securities said the court ruling was unlikely to push the overall index down even though it caused a sudden shock.
"This news represents a negative
surprise and is certainly a near-term headwind against the stock of any company with facilities in or near Map Ta Phut," Bualuang said.
Surong Bualakula, senior executive vice-president for the international business unit of PTT, said Thailand's competitiveness had been crimped by the Map Ta Phut case.
The development could prompt PTT to look at neighbouring countries such as Cambodia, which has larger natural gas and oil reserves, as well as a pipeline network. The Cambodian government is considering a plan to build an energy complex in Sihanoukville, he said.
"Map Ta Phut is the centre of Thailand's industrial development region with a competitive advantage in the gas-based petrochemical industry," Mr Surong said."What downstream manufacturers or automakers will invest in Thailand now because they cannot be sure if they will have enough raw materials in the future?"
Shares of Siam Cement (SCC) closed yesterday at 222 baht, down 5 baht, in trade worth 1.11 billion. PTT shares rose 3 baht, but PTTAR fell 1.10 baht to 24.40 in trade worth 1.7 billion while PTTCH fell 4 baht to 73.25 in trade worth 844 million. GLOW fell 1.75 baht to 32.75 in trade worth 135 million.
Sunday, September 27, 2009
PTTEP says spill control work on schedule
PTT Exploration & Production Plc said on Saturday that its efforts to stop an oil spill off Western Australia by early October remained on track.
The latest phase of the relief well drilling was expected to be completed over the next few days, the company said.
Oil, gas and condensate started seeping into the Timor Sea at the company's Montara well on Aug 21. PTT is working to intersect the well and inject heavy mud to stop the flow.
The latest phase of the relief well drilling was expected to be completed over the next few days, the company said.
Oil, gas and condensate started seeping into the Timor Sea at the company's Montara well on Aug 21. PTT is working to intersect the well and inject heavy mud to stop the flow.
B10 biodiesel tests to start
Local field tests will start soon on biodiesel B10, a blend of 10%methyl ester with 90% diesel fuel, according to an Energy Ministry official.
PTT Plc and the ministry's Department of Energy Business are carrying out the tests, which are expected to finish next year. The goal is to widen the choice of fuels available to motorists and increase the share of alternative fuels in the country's overall energy use.
The ministry expects biodiesel B5 to replace all existing B2 in the domestic market by 2011, but B10 use is not expected to be universal until 2022.
The ministry introduced B5 in 2007 and manufacturers of diesel-engine cars last month agreed to accredit the fuel.
"We are preparing well in advance to have a guarantee for the public about the quality of B10 before mandatory use in 2022," said the official.
The national renewable energy plan projects biodiesel use will reach 4.5 mil-lion litres per day, replacing 10% of existing diesel, by 2022.
Ensuring the availability of sufficient raw materials for biodiesel is a key part of the planning process.
"We are in the preparatory stage before the supply of crude palm oil will be enough for the transport sector," said the official."Raw palm now is slightly in surplus in the food sector."
Thailand has a total demand for palmbased methyl ester of 1.8 million litres per day, out of overall methyl ester capacity of 4.4 million litres daily.
Biodiesel B5 is rapidly gaining acceptance, according to statistics from the department. Demand for B5 doubled year-on-year in August to 22.3 million litres per day. However, B2 consumption dropped 24% to 23.4 million litres.
Demand for ethanol-blended petrol (gasohol) rose 16.2% to 11.5 million litres per day in August. Gasohol demand has been increasing steadily since 2006,helped by subsidies of pump prices by the state Oil Fund.
PTT Plc and the ministry's Department of Energy Business are carrying out the tests, which are expected to finish next year. The goal is to widen the choice of fuels available to motorists and increase the share of alternative fuels in the country's overall energy use.
The ministry expects biodiesel B5 to replace all existing B2 in the domestic market by 2011, but B10 use is not expected to be universal until 2022.
The ministry introduced B5 in 2007 and manufacturers of diesel-engine cars last month agreed to accredit the fuel.
"We are preparing well in advance to have a guarantee for the public about the quality of B10 before mandatory use in 2022," said the official.
The national renewable energy plan projects biodiesel use will reach 4.5 mil-lion litres per day, replacing 10% of existing diesel, by 2022.
Ensuring the availability of sufficient raw materials for biodiesel is a key part of the planning process.
"We are in the preparatory stage before the supply of crude palm oil will be enough for the transport sector," said the official."Raw palm now is slightly in surplus in the food sector."
Thailand has a total demand for palmbased methyl ester of 1.8 million litres per day, out of overall methyl ester capacity of 4.4 million litres daily.
Biodiesel B5 is rapidly gaining acceptance, according to statistics from the department. Demand for B5 doubled year-on-year in August to 22.3 million litres per day. However, B2 consumption dropped 24% to 23.4 million litres.
Demand for ethanol-blended petrol (gasohol) rose 16.2% to 11.5 million litres per day in August. Gasohol demand has been increasing steadily since 2006,helped by subsidies of pump prices by the state Oil Fund.
China's industrial profits decline 10.6%
Profits at China's oil producers, steel makers and other major industrial companies fell 10.6% in the first eight months of 2009 from the same period a year earlier, the National Bureau of Statistics said yesterday.
Total profits for the biggest Chinese industrial companies -those with annual revenues above 5 million yuan ($732,000)- were 1.67 trillion yuan ($245 billion) from January to August, data showed.
The data highlighted the impact of the global economic crisis on China's biggest companies, both private and state-owned, despite a multi-billiondollar government stimulus plan.
But it also marked an improvement from the last such survey in May, in which industrial profits fell 22.9% to 850 billion yuan ($124 billion) in the first five months of 2009 from the same period a year earlier.
Hardest hit were the iron and steel sector, where profits declined by 71.7%,and the petroleum and natural gas industries, which suffered a 68.5% drop in profits.
Total profits for the biggest Chinese industrial companies -those with annual revenues above 5 million yuan ($732,000)- were 1.67 trillion yuan ($245 billion) from January to August, data showed.
The data highlighted the impact of the global economic crisis on China's biggest companies, both private and state-owned, despite a multi-billiondollar government stimulus plan.
But it also marked an improvement from the last such survey in May, in which industrial profits fell 22.9% to 850 billion yuan ($124 billion) in the first five months of 2009 from the same period a year earlier.
Hardest hit were the iron and steel sector, where profits declined by 71.7%,and the petroleum and natural gas industries, which suffered a 68.5% drop in profits.
Oil prices rebound after recent slump
Oil prices rebounded yesterday after recent heavy falls triggered by fresh concer ns about the pace of economic recovery in the United States, the world's largest energy-consuming nation.
New York's main contract, light sweet crude for November delivery, rose 65 cents to $66.54 a barrel.
Brent North Sea crude for November delivery climbed 81 cents to $65.63 in London trade.
"Crude prices are higher after the dollar weakened and G20 nations pledged to keep in place emergency economic stimulus (measures) until there is a durable recovery," said Sucden Financial Research analyst Nimit Khamar.
"Prices were also supported following a research note from Goldman Sachs who left their price forecasts for crude unchanged at $85 by the end of the year and an average of $90 in 2010.'
G20 leaders were yesterday set to say that economic stimulus measures to cope with the global financial crisis should be maintained "until a durable recovery is secured,' according to a draft of their joint statement.
Oil closed down more than three dollars on Thursday as mixed US economic data and signs of sluggish US energy demand highlighted fears about a tepid recovery from the global recession.
Prices fell almost three dollars on Wednesday in reaction to a large jump in US crude oil inventories - a sign that energy demand remains weak.
Worries about the pace of the US economic recovery intensified after data Thursday showed existing home sales fell 2.7% in August to 5.10 million units,snapping a winning streak.
On Wednesday, a widely-watched Department of Energy report showed US crude reser ves rose 2.8 million barrels in the week to September 18,against analyst expectations oF a decline.
Stocks of distillates, which include heating fuel, rose by three million barrels last week. Distillates are closely monitored ahead of the northern hemisphere winter when demand for heating fuel peaks.
Energy demand has plunged after the global economy slipped late last year into its worst recession since the 1930s.
This sent oil prices tumbling from historic highs of more than $147 in July 2008 to around $32 in December.
Prices have since recovered somewhat but investors remain concerned over the pace of the upturn.
Oil prices rose strongly above $70 a barrel on Tuesday as the US currency hit a one-year low against the euro.
Since oil is traded in the US currency,a weaker dollar makes the commodity more attractive to holders of stronger units, leading to greater demand and pushing prices higher.
New York's main contract, light sweet crude for November delivery, rose 65 cents to $66.54 a barrel.
Brent North Sea crude for November delivery climbed 81 cents to $65.63 in London trade.
"Crude prices are higher after the dollar weakened and G20 nations pledged to keep in place emergency economic stimulus (measures) until there is a durable recovery," said Sucden Financial Research analyst Nimit Khamar.
"Prices were also supported following a research note from Goldman Sachs who left their price forecasts for crude unchanged at $85 by the end of the year and an average of $90 in 2010.'
G20 leaders were yesterday set to say that economic stimulus measures to cope with the global financial crisis should be maintained "until a durable recovery is secured,' according to a draft of their joint statement.
Oil closed down more than three dollars on Thursday as mixed US economic data and signs of sluggish US energy demand highlighted fears about a tepid recovery from the global recession.
Prices fell almost three dollars on Wednesday in reaction to a large jump in US crude oil inventories - a sign that energy demand remains weak.
Worries about the pace of the US economic recovery intensified after data Thursday showed existing home sales fell 2.7% in August to 5.10 million units,snapping a winning streak.
On Wednesday, a widely-watched Department of Energy report showed US crude reser ves rose 2.8 million barrels in the week to September 18,against analyst expectations oF a decline.
Stocks of distillates, which include heating fuel, rose by three million barrels last week. Distillates are closely monitored ahead of the northern hemisphere winter when demand for heating fuel peaks.
Energy demand has plunged after the global economy slipped late last year into its worst recession since the 1930s.
This sent oil prices tumbling from historic highs of more than $147 in July 2008 to around $32 in December.
Prices have since recovered somewhat but investors remain concerned over the pace of the upturn.
Oil prices rose strongly above $70 a barrel on Tuesday as the US currency hit a one-year low against the euro.
Since oil is traded in the US currency,a weaker dollar makes the commodity more attractive to holders of stronger units, leading to greater demand and pushing prices higher.
PTTEP grows in Australia
PTT Exploration and Production Plc (PTTEP) is expanding its upstream oil business in Australia through an acquisition of OMV Timor Sea Pty.
PTTEP Australia Browse Basin, which is wholly owned by PTTEP, has signed a share sales agreement to purchase 100% of OMV Timor Sea from OMV Pty Australia, chief executive Anon Sirisaengtaksin said yesterday.
The acquisition will allow PTTEP to acquire petroleum exploration rights for five blocks and two offshore oil fields in a transaction worth US$10 million (about 335 million baht).
In January, Thailand's largest petroleum exploration and production company won approval from Australian regulators for the $170-million purchase of Coogee Resources Ltd as its first acquisition there.
"Our new acquisition in Australia is a part of PTTEP's strategic plan to seek opportunities in target countries with petroleum potential," Mr Anon said.
"The new investment is aimed at generating potential synergies of existing assets and adding value of investment profiles while ensuring the company's growth in the long term."
OMV Timor Sea owns offshore exploration and production assets in northwestern Australia. It currently invests in Audacious and Tenacious offshore fields, where production is targeted to start within two years.
The Australian company also owns five exploration blocks and holds an 18.75% interest in the Jabiru and Challis oil fields in the southern Timor Sea,which PTTEP now operates with 70.94%ownership.
Maroot Mrigadat, the PTTEP president, said the new acquisition would help the company develop its oil and gas exploration and production in Australia, a key strategic objective.
The deal is also expected to cut operating expenses and provide material developments as well as exploration upside from prospects accessible from key oil and gas projects, said Mr Maroot.
Located 650 kilometres west of Darwin in the Northern Territory, the Jabiru and Challis fields began oil production in 1986 with output of 4,200 barrels per day. The blocks have estimated net proven reserves of 700,000 barrels of oil equivalent as of May 2009.
OMV Timor Sea has also been granted exploration and production licences for five offshore projects with estimated net proven reserves of 3.4 million barrels of oil equivalent.
PTTEP has expanded its business steadily through investments in 13 countries to date.
In another development, parent PTT Plc has signed an agreement with Tunn Star Co to jointly develop a lubricant business in Burma. Over five years through 2014, the alliance aims for annual lubricant sales of 5 million litres in Burma from next year onward.
"The lubricant market in Burma is very competitive with more than 100 operators including local and foreignowned brands," said Artasith Pothiapinyanvisuth, PTT's executive vicepresident for commercial and international marketing.
By joining with a Burmese distributor,PTT aims to become one of the top five lubricant brands there within three years, he added.
PTT now markets its lubricants in several overseas markets including the Philippines, Vietnam, Greece, Pakistan,Nigeria, New Zealand and China. The company leads Thailand's lubricant market with a 36.8% share.
PTTEP shares closed yesterday on the Stock Exchange of Thailand at 146.5 baht, down 1 baht, in trade worth 985 million baht, and PTT finished at 262 baht, down 3 baht, in trade worth 1.07 billion baht.
PTTEP Australia Browse Basin, which is wholly owned by PTTEP, has signed a share sales agreement to purchase 100% of OMV Timor Sea from OMV Pty Australia, chief executive Anon Sirisaengtaksin said yesterday.
The acquisition will allow PTTEP to acquire petroleum exploration rights for five blocks and two offshore oil fields in a transaction worth US$10 million (about 335 million baht).
In January, Thailand's largest petroleum exploration and production company won approval from Australian regulators for the $170-million purchase of Coogee Resources Ltd as its first acquisition there.
"Our new acquisition in Australia is a part of PTTEP's strategic plan to seek opportunities in target countries with petroleum potential," Mr Anon said.
"The new investment is aimed at generating potential synergies of existing assets and adding value of investment profiles while ensuring the company's growth in the long term."
OMV Timor Sea owns offshore exploration and production assets in northwestern Australia. It currently invests in Audacious and Tenacious offshore fields, where production is targeted to start within two years.
The Australian company also owns five exploration blocks and holds an 18.75% interest in the Jabiru and Challis oil fields in the southern Timor Sea,which PTTEP now operates with 70.94%ownership.
Maroot Mrigadat, the PTTEP president, said the new acquisition would help the company develop its oil and gas exploration and production in Australia, a key strategic objective.
The deal is also expected to cut operating expenses and provide material developments as well as exploration upside from prospects accessible from key oil and gas projects, said Mr Maroot.
Located 650 kilometres west of Darwin in the Northern Territory, the Jabiru and Challis fields began oil production in 1986 with output of 4,200 barrels per day. The blocks have estimated net proven reserves of 700,000 barrels of oil equivalent as of May 2009.
OMV Timor Sea has also been granted exploration and production licences for five offshore projects with estimated net proven reserves of 3.4 million barrels of oil equivalent.
PTTEP has expanded its business steadily through investments in 13 countries to date.
In another development, parent PTT Plc has signed an agreement with Tunn Star Co to jointly develop a lubricant business in Burma. Over five years through 2014, the alliance aims for annual lubricant sales of 5 million litres in Burma from next year onward.
"The lubricant market in Burma is very competitive with more than 100 operators including local and foreignowned brands," said Artasith Pothiapinyanvisuth, PTT's executive vicepresident for commercial and international marketing.
By joining with a Burmese distributor,PTT aims to become one of the top five lubricant brands there within three years, he added.
PTT now markets its lubricants in several overseas markets including the Philippines, Vietnam, Greece, Pakistan,Nigeria, New Zealand and China. The company leads Thailand's lubricant market with a 36.8% share.
PTTEP shares closed yesterday on the Stock Exchange of Thailand at 146.5 baht, down 1 baht, in trade worth 985 million baht, and PTT finished at 262 baht, down 3 baht, in trade worth 1.07 billion baht.
Suthep calls on Cambodia to offer its cooperation
Thailand and Cambodia should work together to develop and benefit from the natural resources in their disputed waters, suggested Deputy Prime Minister Suthep Thaugsuban.
The two countries should set up a joint venture to mutually develop resources in the disputed waters claimed by both countries, Mr Suthep said yesterday.
He made his comment in response to reports that Cambodia had unilaterally granted a petroleum exploration concession to a Japanese company in the disputed zone.
A joint venture could offer a resolution to the dispute as both countries had yet to discuss the demarcation of the area,he said.
"Regarding the disputed waters of Thailand and Cambodia, Cambodia is also claiming possession and has already started granting the areas to concessionaires.
"As Thailand is doing the same thing, I think if this continues,the situation would become all the more complicated," Mr Suthep said.
"What we can do is enter into negotiations and Suthep: Seeking agree that the deal with Cambodia claimed territories should not overlap. We should cooperate and share the benefits."
Mr Suthep said he had not yet contacted any Cambodian officials to discuss the idea as he currently had bigger issues to deal with.
However, if Prime Minister Abhisit Vejjajiva wanted the matter to be dealt with immediately, he would go ahead and do so, said Mr Suthep.
Vasin Teeravechyan, chairman of the Thai-Cambodian Joint Boundary Commission, explained that both Thailand and Cambodia were granting concessions in disputed waters to demonstrate their right over the areas and concessionaires should not launch any operations there as long as there is no pact between the two countries.
So far, petroleum exploration has not begun on behalf of Cambodia in the disputed waters.
Such operations were time-consuming and also required the installation of an oil rig which could not escape the Royal Thai Navy's eye as its vessels regularly patrol the contentious sea borders, he said.
Cambodia earlier agreed to grant a concession to France-based Total for petroleum exploration in a disputed area between Thailand's Koh Kut island in Trat province and Cambodia's Koh Kong island. But the deal has still not been signed.
Mitsui Oil Exploration Co has applied to Cambodia for exploration rights in the overlapping area.
The Thai government cannot go ahead with the negotiations without seeking parliamentary approval for a framework on the talks first.
The two countries should set up a joint venture to mutually develop resources in the disputed waters claimed by both countries, Mr Suthep said yesterday.
He made his comment in response to reports that Cambodia had unilaterally granted a petroleum exploration concession to a Japanese company in the disputed zone.
A joint venture could offer a resolution to the dispute as both countries had yet to discuss the demarcation of the area,he said.
"Regarding the disputed waters of Thailand and Cambodia, Cambodia is also claiming possession and has already started granting the areas to concessionaires.
"As Thailand is doing the same thing, I think if this continues,the situation would become all the more complicated," Mr Suthep said.
"What we can do is enter into negotiations and Suthep: Seeking agree that the deal with Cambodia claimed territories should not overlap. We should cooperate and share the benefits."
Mr Suthep said he had not yet contacted any Cambodian officials to discuss the idea as he currently had bigger issues to deal with.
However, if Prime Minister Abhisit Vejjajiva wanted the matter to be dealt with immediately, he would go ahead and do so, said Mr Suthep.
Vasin Teeravechyan, chairman of the Thai-Cambodian Joint Boundary Commission, explained that both Thailand and Cambodia were granting concessions in disputed waters to demonstrate their right over the areas and concessionaires should not launch any operations there as long as there is no pact between the two countries.
So far, petroleum exploration has not begun on behalf of Cambodia in the disputed waters.
Such operations were time-consuming and also required the installation of an oil rig which could not escape the Royal Thai Navy's eye as its vessels regularly patrol the contentious sea borders, he said.
Cambodia earlier agreed to grant a concession to France-based Total for petroleum exploration in a disputed area between Thailand's Koh Kut island in Trat province and Cambodia's Koh Kong island. But the deal has still not been signed.
Mitsui Oil Exploration Co has applied to Cambodia for exploration rights in the overlapping area.
The Thai government cannot go ahead with the negotiations without seeking parliamentary approval for a framework on the talks first.
PTT NAMES LUBRICANT SUPPLIER FOR BURMA
PTT yesterday appointed Tunn Star as its lubricant distributor in Burma in a bid to boost its annual sales volume there to 5 million litres.
Atasit Pho-aphiyanvisut, PTT's president for commercial and overseas marketing, signed a five-year distribution agreement with Tunn Star chairman Tony Chai.
"PTT has worked with Tunn Star since 2007. It has been operating in the business for more than 40 years and is dedicated to boosting sales in this fiercely competitive market in which more than 100 local and foreign companies are active," Athasit said.
He is confident the agreement will lead to higher confidence in PTT lubricant products, which meet international standards.
PTT is already experiencing growing sales volume in Burma, from 2 million litres last year to an expected 3 million next year. This has boosted the company to 5th place in the Burmese market, and it expects to move into the top three soon.
PTT first started exporting its lubricant products in 2005, and they are now available in the Philippines, Laos, Cambodia, Vietnam, Greece, Pakistan, Nigeria, New Zealand and China.
The oil and gas conglomerate first entered the lubricant business in 2001, supported by one of the most advanced research - and - delelopment centres in Southeast Asia.
PTT has worked with leading producers of additives to increase product quality and cover all market segments.
It now controls the biggest share in the Thai market, 36.81 per cent as of July.
Atasit Pho-aphiyanvisut, PTT's president for commercial and overseas marketing, signed a five-year distribution agreement with Tunn Star chairman Tony Chai.
"PTT has worked with Tunn Star since 2007. It has been operating in the business for more than 40 years and is dedicated to boosting sales in this fiercely competitive market in which more than 100 local and foreign companies are active," Athasit said.
He is confident the agreement will lead to higher confidence in PTT lubricant products, which meet international standards.
PTT is already experiencing growing sales volume in Burma, from 2 million litres last year to an expected 3 million next year. This has boosted the company to 5th place in the Burmese market, and it expects to move into the top three soon.
PTT first started exporting its lubricant products in 2005, and they are now available in the Philippines, Laos, Cambodia, Vietnam, Greece, Pakistan, Nigeria, New Zealand and China.
The oil and gas conglomerate first entered the lubricant business in 2001, supported by one of the most advanced research - and - delelopment centres in Southeast Asia.
PTT has worked with leading producers of additives to increase product quality and cover all market segments.
It now controls the biggest share in the Thai market, 36.81 per cent as of July.
Thursday, September 24, 2009
Man charged in B50m scam
A man has been charged with operating a pyramid investment scheme that attracted more than a thousand investors and 50 million baht in funds.
Natthachai Machi,41, is also believed to have masterminded several other scams including opening a fraudulent flight attendant training operation, but he has denied all allegations.
Crime Suppression Division police have taken Mr Natthachai into custody after two warrants were issued for his arrest.
CSD deputy chief Suphisan Phakdinoranat said Mr Natthachai and his accomplices had operated a company to lure investors to invest in a fraudulent oil investment scheme.
His victims were led to believe their investments of 250,000 baht would lead to a quick profit of 300,000 baht.
But the investors lost at least 50 million baht between them in the investment scam, Pol Col Suphisan said.
Other suspects who have not been arrested include Thanaphon Chotisaen,Anan Nuthae, Kritaphat Trakulsomsiri and Thatsaphorn Kaosaiyanan.
Pol Col Suphisan said Mr Natthachai had also opened Universe Airline Co to deceive customers who wanted to become flight attendants.
He said Mr Natthachai shut down the company abruptly after receiving money from people who had signed up for training. He also did not pay the company staff their wages.
The employees filed a complaint with police which led to Mr Natthachai's arrest.
Mr Natthachai is thought to have opened several other firms to deceive investors into investing in various types of fraudulent schemes.
Natthachai Machi,41, is also believed to have masterminded several other scams including opening a fraudulent flight attendant training operation, but he has denied all allegations.
Crime Suppression Division police have taken Mr Natthachai into custody after two warrants were issued for his arrest.
CSD deputy chief Suphisan Phakdinoranat said Mr Natthachai and his accomplices had operated a company to lure investors to invest in a fraudulent oil investment scheme.
His victims were led to believe their investments of 250,000 baht would lead to a quick profit of 300,000 baht.
But the investors lost at least 50 million baht between them in the investment scam, Pol Col Suphisan said.
Other suspects who have not been arrested include Thanaphon Chotisaen,Anan Nuthae, Kritaphat Trakulsomsiri and Thatsaphorn Kaosaiyanan.
Pol Col Suphisan said Mr Natthachai had also opened Universe Airline Co to deceive customers who wanted to become flight attendants.
He said Mr Natthachai shut down the company abruptly after receiving money from people who had signed up for training. He also did not pay the company staff their wages.
The employees filed a complaint with police which led to Mr Natthachai's arrest.
Mr Natthachai is thought to have opened several other firms to deceive investors into investing in various types of fraudulent schemes.
IRPC, PTTAR IN JOINT UPGRADE OF REFINERY TO MEET EURO 4
Local integrated oil and petrochemical producer IRPC will co-invest with PTT Aromatics and Refining to upgrade the latter's refinery to meet the Euro 4 standards.
The new standards will be implemented by the beginning of 2012.
"We'll swap oil products among the subsidiaries of the PTT Group and co-invest in the upgrading project of PTTAR's oil refinery. We've not yet finalised the form of the co-investment, but we are expected to make a minor investment in this project," said IRPC chief executive Pailin Chuchottaworn.
He declined to disclose the exact investment budget for the project.
Pailin said it would not be worth it to upgrade all of the facilities to meet Euro 4 standards, because then the remaining premium oil output, which would also be produced at high cost, would only be sent to other countries.
Thai Oil and Bangchak have already upgraded their facilities to comply with Euro 4 standards.
Meanwhile, IRPC has targeted revenue of Bt180 billion this year, down from Bt245 billion last year, due mainly to lower prices for oil and petrochemical products.
Seventy per cent of revenue will come from oil refining and the rest from petrochemicals.
Pailin said the third quarter would be better for the company than the second quarter, thanks to rising prices of oil and petrochemical goods.
He said the price of plastic pellets was about US$1,200 (Bt40,300) per tonne, up 20 per cent from the average in 2008, when oil and petrochemical prices fluctuated wildly.
He said the price for plastic pellets could remain at the $1,200 level next year.
"The price may tend to soften, due to greater supply from new production plants in the Middle East. But there's a chance demand will spike from the Shanghai Expo and the Asian Games in China," he said.
IRPC yesterday introduced an electronic transaction system, in cooperation with Kasikornbank, to boost customer satisfaction and the efficiency of its plastic trading system, since it exports to more than 100 countries.
He said the company was trying to improve its office system, which would play a significant role in enhancing business performance and helping achieve the goal of being in the top 25 per cent of Asian petrochemical complexes by 2014.
The new system will reduce operation costs by Bt30 million per year, he said.
The new standards will be implemented by the beginning of 2012.
"We'll swap oil products among the subsidiaries of the PTT Group and co-invest in the upgrading project of PTTAR's oil refinery. We've not yet finalised the form of the co-investment, but we are expected to make a minor investment in this project," said IRPC chief executive Pailin Chuchottaworn.
He declined to disclose the exact investment budget for the project.
Pailin said it would not be worth it to upgrade all of the facilities to meet Euro 4 standards, because then the remaining premium oil output, which would also be produced at high cost, would only be sent to other countries.
Thai Oil and Bangchak have already upgraded their facilities to comply with Euro 4 standards.
Meanwhile, IRPC has targeted revenue of Bt180 billion this year, down from Bt245 billion last year, due mainly to lower prices for oil and petrochemical products.
Seventy per cent of revenue will come from oil refining and the rest from petrochemicals.
Pailin said the third quarter would be better for the company than the second quarter, thanks to rising prices of oil and petrochemical goods.
He said the price of plastic pellets was about US$1,200 (Bt40,300) per tonne, up 20 per cent from the average in 2008, when oil and petrochemical prices fluctuated wildly.
He said the price for plastic pellets could remain at the $1,200 level next year.
"The price may tend to soften, due to greater supply from new production plants in the Middle East. But there's a chance demand will spike from the Shanghai Expo and the Asian Games in China," he said.
IRPC yesterday introduced an electronic transaction system, in cooperation with Kasikornbank, to boost customer satisfaction and the efficiency of its plastic trading system, since it exports to more than 100 countries.
He said the company was trying to improve its office system, which would play a significant role in enhancing business performance and helping achieve the goal of being in the top 25 per cent of Asian petrochemical complexes by 2014.
The new system will reduce operation costs by Bt30 million per year, he said.
IRPC to beat goal with B180bn sales
SET-listed IRPC Plc expects to beat its previous target for the year and top 180 billion baht in revenue due to strong petrochemical demand from China.
The country's leading petrochemical manufacturer and oil refiner now predicts its revenue will drop by 26% this year from the 244.7 billion baht earned in 2008.
But the company has performed much better in the current quarter as plastic resin is now priced at US$1,200 per tonne, up from $1,000 earlier, chief executive Pailin Chuchottaworn said yesterday.
"Our performance is obviously good in the current quarter and better than the second quarter. The business outlook is now brighter than what we saw earlier," said Dr Pailin.
IRPC, which is 37% owned by PTT Plc, now projects revenue of 180 billion baht this year based on oil at about $70 per barrel. In the quarter to June,the company posted a net profit of 2.42 billion baht, down from 5.12 billion in the same period last year, in line with a decline in revenue of 45% to 40.3 billion baht.
The petrochemical business will account for about 54 billion baht of this year's estimated revenue. The figure is expected to be maintained in 2010.
"Plastic prices will stay at $1,200 per tonne at best next year. The demand from China will remain strong but the outlook remains uncertain, depending largely on additional petrochemical capacities to come on stream next year,"he said.
IRPC is now utilising 75% of its refining capacity of 215,000 barrels per day.
The petrochemical spread has improved slightly in the current quarter from the previous quarter, while the refining margin has weakened marginally. The company's gross integrated margin is in double digits, said Banlue Chantadisai, senior executive vicepresident for corporate accounting and finance.
Average refining capacity is expected to stay at about 150,000 to 160,000 barrels per day in 2009, compared with 180,000 barrels last year. The existing output is enough to serve IRPC's petrochemical business.
Executives also said that IRPC was likely to go for a product swap option with PTT Aromatics and Refinery Plc,another PTT petrochemical and refining unit, to upgrade its refineries to meet the Euro 4 emissions standard.
The Euro 4 project is part of IRPC's $1.2 billion five-year investment plan to become a top integrated petrochemical producer in Asia by 2014.
PTT Plc, Thailand's largest energy company, has studied a merger of its petrochemical and refining affiliates including IRPC and PTTAR. The plan is expected to be finalised next month.
IRPC yesterday launched its "Ideal Solution" service to enable petrochemical trading transactions on personal digital assistants (PDA) worldwide. The system will help reduce operational costs by 30 million baht per year.
Shares of IRPC closed yesterday on the Stock Exchange of Thailand at 4.48 baht, down six satang, in trade worth 1.69 billion baht.
The country's leading petrochemical manufacturer and oil refiner now predicts its revenue will drop by 26% this year from the 244.7 billion baht earned in 2008.
But the company has performed much better in the current quarter as plastic resin is now priced at US$1,200 per tonne, up from $1,000 earlier, chief executive Pailin Chuchottaworn said yesterday.
"Our performance is obviously good in the current quarter and better than the second quarter. The business outlook is now brighter than what we saw earlier," said Dr Pailin.
IRPC, which is 37% owned by PTT Plc, now projects revenue of 180 billion baht this year based on oil at about $70 per barrel. In the quarter to June,the company posted a net profit of 2.42 billion baht, down from 5.12 billion in the same period last year, in line with a decline in revenue of 45% to 40.3 billion baht.
The petrochemical business will account for about 54 billion baht of this year's estimated revenue. The figure is expected to be maintained in 2010.
"Plastic prices will stay at $1,200 per tonne at best next year. The demand from China will remain strong but the outlook remains uncertain, depending largely on additional petrochemical capacities to come on stream next year,"he said.
IRPC is now utilising 75% of its refining capacity of 215,000 barrels per day.
The petrochemical spread has improved slightly in the current quarter from the previous quarter, while the refining margin has weakened marginally. The company's gross integrated margin is in double digits, said Banlue Chantadisai, senior executive vicepresident for corporate accounting and finance.
Average refining capacity is expected to stay at about 150,000 to 160,000 barrels per day in 2009, compared with 180,000 barrels last year. The existing output is enough to serve IRPC's petrochemical business.
Executives also said that IRPC was likely to go for a product swap option with PTT Aromatics and Refinery Plc,another PTT petrochemical and refining unit, to upgrade its refineries to meet the Euro 4 emissions standard.
The Euro 4 project is part of IRPC's $1.2 billion five-year investment plan to become a top integrated petrochemical producer in Asia by 2014.
PTT Plc, Thailand's largest energy company, has studied a merger of its petrochemical and refining affiliates including IRPC and PTTAR. The plan is expected to be finalised next month.
IRPC yesterday launched its "Ideal Solution" service to enable petrochemical trading transactions on personal digital assistants (PDA) worldwide. The system will help reduce operational costs by 30 million baht per year.
Shares of IRPC closed yesterday on the Stock Exchange of Thailand at 4.48 baht, down six satang, in trade worth 1.69 billion baht.
Oil prices hover above $71 amid weak demand
Oil prices hovered above $71 a barrel yesterday as signs of weak crude demand were offset by the effects of a slumping US dollar.
Benchmark crude for November delivery was down 6 cents at $71.70 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract added $1.83 a barrel to settle at $71.76 on Tuesday.
Oil prices have traded between $65 and $75 for months as consumer demand in the US has remained tepid despite evidence of an economic recovery.
"Brimming oil stocks around the world continue to expose demand weakness," said JBC Energy in Vienna.
US oil inventories rose unexpectedly last week, the American Petroleum Institute said late Tuesday. Crude stocks increased 276,000 barrels while analysts had expected a drop of 2.25 million barrels,according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
"The reason oil is trading in this range is this battle between weak supply fundamentals and optimism for economic recovery,' said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
"This seems to be a level that both producers and consumers are happy with."
A weakening US dollar, meanwhile,has helped support oil prices. Because crude is priced in dollars, investors outside the US buy it up when the dollar drops. The euro rose yesterday in European trading to $1.4817 from $1.4788 the previous day while the dollar fell to 90.99 yen from 91.15.
Olivier Jakob of Petromatrix in Switzerland said that while the Dollar Index _ which values the dollar against a basket of foreign currencies _ was now at same level as in September 2008, back then the Nymex contract was worth $109 a barrel.
The big difference, Jakob noted, 'is that US petroleum stocks are at least 140 million barrels above the levels of a year ago."
In other Nymex trading, gasoline for October delivery was down 1.91 cents to $1.7625 a gallon, and heating oil lost 0.26 cent to $1.8095 a gallon. Natural gas was up 0.4 cent to $3.613 per 1,000 cubic feet.
In London, Brent crude fell 37 cents to $70.16 on the ICE Futures exchange.
Investors are closely monitoring the results of a US Federal Reserve policy meeting that could indicate the pace of economic recovery of the United States, the biggest energy consumer. The meeting ends yesterday.
Leaders from the Group of 20 developed and developing nations are also expected to discuss the state of the global economy when they meet later this week in the US city of Pittsburgh.
Benchmark crude for November delivery was down 6 cents at $71.70 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract added $1.83 a barrel to settle at $71.76 on Tuesday.
Oil prices have traded between $65 and $75 for months as consumer demand in the US has remained tepid despite evidence of an economic recovery.
"Brimming oil stocks around the world continue to expose demand weakness," said JBC Energy in Vienna.
US oil inventories rose unexpectedly last week, the American Petroleum Institute said late Tuesday. Crude stocks increased 276,000 barrels while analysts had expected a drop of 2.25 million barrels,according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
"The reason oil is trading in this range is this battle between weak supply fundamentals and optimism for economic recovery,' said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
"This seems to be a level that both producers and consumers are happy with."
A weakening US dollar, meanwhile,has helped support oil prices. Because crude is priced in dollars, investors outside the US buy it up when the dollar drops. The euro rose yesterday in European trading to $1.4817 from $1.4788 the previous day while the dollar fell to 90.99 yen from 91.15.
Olivier Jakob of Petromatrix in Switzerland said that while the Dollar Index _ which values the dollar against a basket of foreign currencies _ was now at same level as in September 2008, back then the Nymex contract was worth $109 a barrel.
The big difference, Jakob noted, 'is that US petroleum stocks are at least 140 million barrels above the levels of a year ago."
In other Nymex trading, gasoline for October delivery was down 1.91 cents to $1.7625 a gallon, and heating oil lost 0.26 cent to $1.8095 a gallon. Natural gas was up 0.4 cent to $3.613 per 1,000 cubic feet.
In London, Brent crude fell 37 cents to $70.16 on the ICE Futures exchange.
Investors are closely monitoring the results of a US Federal Reserve policy meeting that could indicate the pace of economic recovery of the United States, the biggest energy consumer. The meeting ends yesterday.
Leaders from the Group of 20 developed and developing nations are also expected to discuss the state of the global economy when they meet later this week in the US city of Pittsburgh.
Wednesday, September 23, 2009
Dollar down, gold and oil rise
The dollar weakened for the first time in three days against the euro aon speculation group-of-20 leaders this week will call for gains in other currencies to help reduce global trade imbalances.
Gold rose for the first time in four days in London as a sliding dollar boosted demand for the preciousmetal as an alternative investment.
Crude oil also rose for the first time in four days before a report forecast to show US crude supplies contracting, while a weaker dollar boosted the investment appeal of commodities.
The greenback fell versus 14 of the 16 major currencies after a spokesman for Canadian Prime Minister Stephen Harper said leaders meeting in Pittsburgh on September 24-25 will discuss "a frameworkd for balanced and sustainable growth".
New Zealand's dollar rose toward a six-week high against the yen after a government report showed the current-account deficit shrank to the narrowest in more than four years.
"There's talk that world leaders may seek to address the US imnalances," said Masashi Kurabe, head of currency sales and trading in hong Kong at Bank of Tokyo Mitsubishi UFJ, a unit of Japan's biggest publicly trded bank. "This may lead to weakness in the dollar."
The US currency dropped to $1.4714 per euro as of early afternoon in Tokyo, from $1.4680 on Monday in New York. It declined to 91.75 from 91.93 and weakened to $1.6237 per pound from $1.6217. The yen was little changed at 135.01 versus the euro from 134.96.
New Zealand's dollar strengthened 1.2 per cent to 65.79, after earlier climbing to 65.89, the highest level since August 10. The so-called kiwi rose 1.5 per cent to 71.71 US cents. Australia's dollar advanced 0.7 per cent to 86.93 cents.
The US dollar Index, a six-currency gauge of the currency's strength, slipped as much a s.9 per cent as signs the global economy is recovering spurred investors into buying higheryielding assets.
The measure has dropped 6.3 per cent this yer as gold, trading 1.9 per cent below a record $1,032.70 an ounce set in March 2008, has climbed 15 per cent.
"It's mainly dollar driven" and "in the longer term we still expect more dollafr weakness," said Walter de Wet, a London-based Standard Bank analyst. "When we approached the mid-$990 level, there was some physical buying coming in and providing some support."
COMMODITIES
Immediate-delivery bullion gained $9.80, ir 1 per cent, to $1,013.50 an ounce by mid-morning local time. The commodity on Monday dropped as low as $995.97 an ounce. December gold futures were 1 per cent higher at $1,014.90 an ounce on the New York Mercantile Exchange's Comex division.
US crude oil inventories declined a fourth week,according to analysts surveyed by Bloomberg News before an Energy Department report due today. Official data showed net crude oil imports by China,Asia's largest consumer, rose 18 per cent to 17.92 million tonnes in August, the second highest on record.
Gold rose for the first time in four days in London as a sliding dollar boosted demand for the preciousmetal as an alternative investment.
Crude oil also rose for the first time in four days before a report forecast to show US crude supplies contracting, while a weaker dollar boosted the investment appeal of commodities.
The greenback fell versus 14 of the 16 major currencies after a spokesman for Canadian Prime Minister Stephen Harper said leaders meeting in Pittsburgh on September 24-25 will discuss "a frameworkd for balanced and sustainable growth".
New Zealand's dollar rose toward a six-week high against the yen after a government report showed the current-account deficit shrank to the narrowest in more than four years.
"There's talk that world leaders may seek to address the US imnalances," said Masashi Kurabe, head of currency sales and trading in hong Kong at Bank of Tokyo Mitsubishi UFJ, a unit of Japan's biggest publicly trded bank. "This may lead to weakness in the dollar."
The US currency dropped to $1.4714 per euro as of early afternoon in Tokyo, from $1.4680 on Monday in New York. It declined to 91.75 from 91.93 and weakened to $1.6237 per pound from $1.6217. The yen was little changed at 135.01 versus the euro from 134.96.
New Zealand's dollar strengthened 1.2 per cent to 65.79, after earlier climbing to 65.89, the highest level since August 10. The so-called kiwi rose 1.5 per cent to 71.71 US cents. Australia's dollar advanced 0.7 per cent to 86.93 cents.
The US dollar Index, a six-currency gauge of the currency's strength, slipped as much a s.9 per cent as signs the global economy is recovering spurred investors into buying higheryielding assets.
The measure has dropped 6.3 per cent this yer as gold, trading 1.9 per cent below a record $1,032.70 an ounce set in March 2008, has climbed 15 per cent.
"It's mainly dollar driven" and "in the longer term we still expect more dollafr weakness," said Walter de Wet, a London-based Standard Bank analyst. "When we approached the mid-$990 level, there was some physical buying coming in and providing some support."
COMMODITIES
Immediate-delivery bullion gained $9.80, ir 1 per cent, to $1,013.50 an ounce by mid-morning local time. The commodity on Monday dropped as low as $995.97 an ounce. December gold futures were 1 per cent higher at $1,014.90 an ounce on the New York Mercantile Exchange's Comex division.
US crude oil inventories declined a fourth week,according to analysts surveyed by Bloomberg News before an Energy Department report due today. Official data showed net crude oil imports by China,Asia's largest consumer, rose 18 per cent to 17.92 million tonnes in August, the second highest on record.
Sound familiar?
Your TOT crossed its heart and hoped to die if it fails to have actual third-generation mobile phone service in a little corner of Bangkok before New Year's Eve; Vichien Narkseenuan, the firm's senior executive president for vice, said he expects to sign a deal Real Soon Now with a socalled mobile virtual network operator (MVNO) that will carry the TOT service,although no names, please; Mr Vichien promised "about" 500,000 numbers would be available; real yuppiephone networks scoffed at the TOT offer to let them in on the deal, because they fear that if they rent a network now, the National Telecommunications Commission won't let them bid for a licence to run their own 3G services.
Vichien Narkseenuan, the senior executive president of vice for your TOT ,said that the state monopoly plans to open a third-generation (3G) phone service with 100,000 numbers, and serving the entire country; TOT has no intention of building its own base stations,though, and will rent them from real phone companies; Mr Vichien forgot to mention when this nationwide 3G service might start for the lucky 100,000.
The National Telecommunications Commission announced it will open public hearings on third generation phones next Monday; Prasert Aphipunya, secretary in charge of vice for the NTC, said you should bring along a large truck load of money if you want to start the bidding for licences, say,oh, somewhere around 10 billion-witha-"b" baht; after next weeks' hearing,there will be a notice in the Royal Gazette ,and actual bidding for four (and only four) available licences may open as early as December; rules on all of this should be up on the NTC's website by now at www.ntc.co.th.
For the third time in a row, the strug-gling TT&T company won a multibillion-baht lawsuit against your TOT and for the third time in a row your TOT told them to pound sand; this time,an agree-upon arbitrator decided that TOT owed the up-country phone provider 2.3 billion baht in misguided revenue sharing for long distance calls;but TOT president Varut Suvakorn rejected the arbitration and told TT&T,"See ya in court, boys"; in case the Administrative Court rules against TOT yet again, Mr Varut said he was pretty sure the state firm didn't have that kind of money to pay off anyhow; TT&T explained that lawsuit number four is about to be filed.
No 2 yuppiephone firm DTAC of Norway opened its new headquarters in new Chamchuri Square , bragging that it spent one billion baht on the 19-floor (!) digs; all 3,200 DTAC employees relocated from the Chai Building to the new location at the Sam Yan intersection,overlooking Chulalongkorn University;CEO Tore Johnsen signed a 10-year lease for the 61,160-square-metre office,which includes the firm's main call centre; Mr Johnsen said new staff will work harder to pay the extra rent money; the kicker is that DTAC is asking the following price for the Chai Building one billion baht; Mr Johnsen said that DTAC was pressing ahead aggressively on its 3G trials and so on and etc and zzzzzzz.
Energy Minister Wannarat Channukul, apparently unaware that you can't spell "Thaksin" without "hub", said that Asean should become the energy exporting hub of the world; no, really,his reasoning is that Southeast Asia has so much food that it can make biofuels galore and sell it to the world at Arabesque profits; not only does Southeast Asia (sic) have a lot of extra food to feed the world's cars, it's, well, better "higher yields and more commercially viable for biofuel than corn and beetroot" from the US and Europe; to coin a phrase, in the klongs there are fish and in the fields there are biofuels.
Energy Minister Wannarat Channukul called in state firms and phuyai of the private sector for a heart-to-heart joint statement that everyone would cooperate on saving energy; this year's spin is that the programme will "save"100 billion baht, and Mr Wannarat got away unchallenged with a claim that a similar project last year saved 30 billion baht; the deal is that the Federation of Thai Industries (FTI) and the Thai Chamber of Commerce (TCC) and so on - 30,000 firms altogether - will work on conservation, purchase green technology and so on, and in return they will get some tax breaks and subsidies on loans taken through the energy services company fund (Esco); the minister is looking for one billion baht to fund Esco this year.
Vichien Narkseenuan, the senior executive president of vice for your TOT ,said that the state monopoly plans to open a third-generation (3G) phone service with 100,000 numbers, and serving the entire country; TOT has no intention of building its own base stations,though, and will rent them from real phone companies; Mr Vichien forgot to mention when this nationwide 3G service might start for the lucky 100,000.
The National Telecommunications Commission announced it will open public hearings on third generation phones next Monday; Prasert Aphipunya, secretary in charge of vice for the NTC, said you should bring along a large truck load of money if you want to start the bidding for licences, say,oh, somewhere around 10 billion-witha-"b" baht; after next weeks' hearing,there will be a notice in the Royal Gazette ,and actual bidding for four (and only four) available licences may open as early as December; rules on all of this should be up on the NTC's website by now at www.ntc.co.th.
For the third time in a row, the strug-gling TT&T company won a multibillion-baht lawsuit against your TOT and for the third time in a row your TOT told them to pound sand; this time,an agree-upon arbitrator decided that TOT owed the up-country phone provider 2.3 billion baht in misguided revenue sharing for long distance calls;but TOT president Varut Suvakorn rejected the arbitration and told TT&T,"See ya in court, boys"; in case the Administrative Court rules against TOT yet again, Mr Varut said he was pretty sure the state firm didn't have that kind of money to pay off anyhow; TT&T explained that lawsuit number four is about to be filed.
No 2 yuppiephone firm DTAC of Norway opened its new headquarters in new Chamchuri Square , bragging that it spent one billion baht on the 19-floor (!) digs; all 3,200 DTAC employees relocated from the Chai Building to the new location at the Sam Yan intersection,overlooking Chulalongkorn University;CEO Tore Johnsen signed a 10-year lease for the 61,160-square-metre office,which includes the firm's main call centre; Mr Johnsen said new staff will work harder to pay the extra rent money; the kicker is that DTAC is asking the following price for the Chai Building one billion baht; Mr Johnsen said that DTAC was pressing ahead aggressively on its 3G trials and so on and etc and zzzzzzz.
Energy Minister Wannarat Channukul, apparently unaware that you can't spell "Thaksin" without "hub", said that Asean should become the energy exporting hub of the world; no, really,his reasoning is that Southeast Asia has so much food that it can make biofuels galore and sell it to the world at Arabesque profits; not only does Southeast Asia (sic) have a lot of extra food to feed the world's cars, it's, well, better "higher yields and more commercially viable for biofuel than corn and beetroot" from the US and Europe; to coin a phrase, in the klongs there are fish and in the fields there are biofuels.
Energy Minister Wannarat Channukul called in state firms and phuyai of the private sector for a heart-to-heart joint statement that everyone would cooperate on saving energy; this year's spin is that the programme will "save"100 billion baht, and Mr Wannarat got away unchallenged with a claim that a similar project last year saved 30 billion baht; the deal is that the Federation of Thai Industries (FTI) and the Thai Chamber of Commerce (TCC) and so on - 30,000 firms altogether - will work on conservation, purchase green technology and so on, and in return they will get some tax breaks and subsidies on loans taken through the energy services company fund (Esco); the minister is looking for one billion baht to fund Esco this year.
Beijing tries new tack on Spratly spat
China sees no solution in sight to territorial disputes over potentially oil-rich South China Sea regions so it has begun to discuss possible joint projects with other claimant countries to avoid confrontations, a Chinese official said yesterday.
A joint scientific study by China, the Philippines and Vietnam to determine the prospects of striking oil or gas in a part of the contested region called the Spratlys is a model that Beijing seeks to undertake with other claimants, Philippines Ambassador Liu Jianchao said.
Brunei, China, Malaysia, the Philippines, Taiwan and Vietnam claim all or part of about 100 Spratly islets, reefs and atolls that are believed to be sitting atop vast deposits of oil and natural gas reserves. The largely uninhabited islands and surrounding waters straddle busy sea lanes and are rich fishing grounds.
The disputed islands are regarded a potential flash point for conflict in Asia.
The battle for ownership of the region has settled into an uneasy standoff since the last fighting, involving China and Vietnam, killed more than 70 Vietnamese sailors in 1988.
"I think the settlement of the issue will take a very long time," Mr Liu said,citing a China-Russia border problem that took more than 50 years to resolve.
China wants to settle the disputes peacefully by engaging each claimant country in bilateral negotiations. It has opposed any attempt to include outsiders like the US or Asean in talks.
Resolving the issue will be complex,but China wants to enter into joint projects with other claimant countries to build confidence and "move forward",Mr Liu said. With confidence-building projects, there will be "less chance of confrontation", he added.
A joint scientific study by China, the Philippines and Vietnam to determine the prospects of striking oil or gas in a part of the contested region called the Spratlys is a model that Beijing seeks to undertake with other claimants, Philippines Ambassador Liu Jianchao said.
Brunei, China, Malaysia, the Philippines, Taiwan and Vietnam claim all or part of about 100 Spratly islets, reefs and atolls that are believed to be sitting atop vast deposits of oil and natural gas reserves. The largely uninhabited islands and surrounding waters straddle busy sea lanes and are rich fishing grounds.
The disputed islands are regarded a potential flash point for conflict in Asia.
The battle for ownership of the region has settled into an uneasy standoff since the last fighting, involving China and Vietnam, killed more than 70 Vietnamese sailors in 1988.
"I think the settlement of the issue will take a very long time," Mr Liu said,citing a China-Russia border problem that took more than 50 years to resolve.
China wants to settle the disputes peacefully by engaging each claimant country in bilateral negotiations. It has opposed any attempt to include outsiders like the US or Asean in talks.
Resolving the issue will be complex,but China wants to enter into joint projects with other claimant countries to build confidence and "move forward",Mr Liu said. With confidence-building projects, there will be "less chance of confrontation", he added.
Oil hangs near $70 in Asia after big tumble
Oil prices hung near $70 a barrel yesterday in Asia after falling steeply overnight amid news that China's crude consumption fell in August.
Benchmark crude for October delivery was up 59 cents at $70.30 a barrel by late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell $2.33 to settle at $69.71 on Monday.
Energy consumption in No rth America and Europe has been crimped by recession, leaving China as one of the few countries that continue to consume oil, gasoline and diesel in growing quantities. That pace, at least during late summer, appeared to slow,according to a report released Monday.
Chinese oil demand slid 5.4% in August from July, the first monthto-month drop since March, according to Platts, the energy information arm of McGraw-Hill Cos, as the world's second-largest oil consumer reined in oil imports and crude throughput rates at its domestic refineries.
But some analysts expect a secondhalf recovery in demand from Europe and the US combined with still decent energy appetite from Asia to boost oil prices.
"I think we're going to see a pretty significant recovery in the second half in the US and Eur ope, and demand from China has been holding up,' said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "I see more upside than downside for oil prices right now."
Moltke-Leth said crude could r ise above $75 during the next month. "If we can break through that, prices will likely jump to $80."
In other Nymex trading, gasoline for October delivery rose 1.61 cents to $1.7675 a gallon, and heating oil rose 2.12 cents to $1.7729 a gallon. Natural gas,after tumbling more than 5 percent, was up 10.5 cents to $3.681 per 1,000 cubic feet.
In London, Brent crude rose 62 cents to $69.33 on the ICE Futures exchange.
"Oil has continued to take its cue from the value of the US dollar,' said Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore.
"The dollar has weakened against the euro and also the yen and that has provided some support to oil."
Since oil is traded in the US currency,a weaker dollar makes the commodity more attractive to holders of stronger units, leading to greater demand and pushing prices higher.
Shum said investors are waiting for the results of the Fed meeting yesterday and today, with keen interest on any indications US interest rates will be raised as the economy stabilises.
Benchmark crude for October delivery was up 59 cents at $70.30 a barrel by late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract fell $2.33 to settle at $69.71 on Monday.
Energy consumption in No rth America and Europe has been crimped by recession, leaving China as one of the few countries that continue to consume oil, gasoline and diesel in growing quantities. That pace, at least during late summer, appeared to slow,according to a report released Monday.
Chinese oil demand slid 5.4% in August from July, the first monthto-month drop since March, according to Platts, the energy information arm of McGraw-Hill Cos, as the world's second-largest oil consumer reined in oil imports and crude throughput rates at its domestic refineries.
But some analysts expect a secondhalf recovery in demand from Europe and the US combined with still decent energy appetite from Asia to boost oil prices.
"I think we're going to see a pretty significant recovery in the second half in the US and Eur ope, and demand from China has been holding up,' said Christoffer Moltke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "I see more upside than downside for oil prices right now."
Moltke-Leth said crude could r ise above $75 during the next month. "If we can break through that, prices will likely jump to $80."
In other Nymex trading, gasoline for October delivery rose 1.61 cents to $1.7675 a gallon, and heating oil rose 2.12 cents to $1.7729 a gallon. Natural gas,after tumbling more than 5 percent, was up 10.5 cents to $3.681 per 1,000 cubic feet.
In London, Brent crude rose 62 cents to $69.33 on the ICE Futures exchange.
"Oil has continued to take its cue from the value of the US dollar,' said Victor Shum, senior principal at Purvin and Gertz energy consultancy in Singapore.
"The dollar has weakened against the euro and also the yen and that has provided some support to oil."
Since oil is traded in the US currency,a weaker dollar makes the commodity more attractive to holders of stronger units, leading to greater demand and pushing prices higher.
Shum said investors are waiting for the results of the Fed meeting yesterday and today, with keen interest on any indications US interest rates will be raised as the economy stabilises.
NATIONAL ENERGY PANEL MULLS INCREASING MARGINS FOR RETAILERS
The National Energy Policy Committee will review oil retailers' marketing margins to see if there is a possibility of increasing it from Bt1.50 to Bt2.20 per litre owing to rising investment costs, a source from the committee said yesterday. According to a study by the Energy Policy and Planning Office, the new margin is based on a 12 per cent return on investment for a medium-sized two-rai petrol station.
However, the source said this rate does not take into account returns on non-oil businesses such as convenience stores or car-cleaning services.
The study also pointed out that the margin for liquefied petroleum gas (LPG) should be raised from Bt3.257 to Bt3.03 per kilogram.
"The office has presented the study, but we will discuss if it |could be used as an official reference point at the meeting," the source said.
The committee will also consider incentives to boost consumption of E85 gasohol, which could prompt the Oil Fund to increase the subsidy from Bt7.13 per litre to Bt10.
The higher subsidy would lower the cost of the high-ethanol-content fuel by Bt3 per litre from Bt22.72 at present.
The panel will also consider raising the Oil Fund's budget to convert LPG taxis to ones driven by natural gas for vehicles (NGV) and the pricing structure for purple oil - the high-sulphur oil used for small fishing boats.
However, the source said this rate does not take into account returns on non-oil businesses such as convenience stores or car-cleaning services.
The study also pointed out that the margin for liquefied petroleum gas (LPG) should be raised from Bt3.257 to Bt3.03 per kilogram.
"The office has presented the study, but we will discuss if it |could be used as an official reference point at the meeting," the source said.
The committee will also consider incentives to boost consumption of E85 gasohol, which could prompt the Oil Fund to increase the subsidy from Bt7.13 per litre to Bt10.
The higher subsidy would lower the cost of the high-ethanol-content fuel by Bt3 per litre from Bt22.72 at present.
The panel will also consider raising the Oil Fund's budget to convert LPG taxis to ones driven by natural gas for vehicles (NGV) and the pricing structure for purple oil - the high-sulphur oil used for small fishing boats.
Oil falls to near $71 in Asia amid weak demand
Oil prices fell to near $71 a barrel yesterday in Asia as high crude stockpiles and weak demand tempered enthusiasm about recent signs of improvement in the world's largest economy.
Benchmark crude for October delivery was down 88 cents at $71.16 a barrel by late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract gave up 43 cents Friday to settle at $72.04 a barrel.
The recession has sapped American fuel consumption, and US oil stockpiles are 14% larger than last year even as recent data suggests the economy is clawing out of recession.
The Energy Information Administration said Wednesday that the country also is sitting on a sea of distillate fuels including heating oil, with stockpiles approaching a 27-year high.
"Most of the macro data from the US over the last month has been suppor-tive of oil prices," said David Moore,commodity strategist at Commonwealth Bank of Australia in Sydney. "But inventories remain high and demand is weak, so that's capping prices.'
Moore said crude will likely average $64 a barrel in the fourth quarter before rising to average $80 in the October to December period of 2010.
In other Nymex trading, gasoline for October delivery slipped 1.58 cents to $1.8166 a gallon, and heating oil fell 1.74 cents to $1.8105 a gallon. Natural gas fell 5.0 cents to $3.728 per 1,000 cubic feet.
In London, Brent crude fell $1.07 to $70.27 on the ICE Futures exchange.
"Oil is stalling ahead of the fourth quar ter and we expect a gradual pick-up in volatility at the ver y end of September," said VTB Capital analyst Andrey Kryuchenkov.
"We still believe that the upside is capped at the moment and we do not expect significant gains until October.'
Crude oil fell on Friday, under pressure from a slightly stronger dollar and as many traders chose to take profits.
The dollar's small appreciation also weighed on dollar-priced oil, making it more expensive for buyers using other currencies.
"The petroleum complex was softer on Friday as the US dollar mounted a comeback," analysts at John Hall Associates wrote in a note to clients.
The dollar's overall weakening trend _it sank to a near-year low against the euro last week _has been price-supportive of oil and other commodities.
Oil also won support last week from weekly official data showing a large decrease in US crude reserves.
The decline was seen as an indication that US oil demand was improving but some analysts cautioned that its stockpiles remained huge and pr ices had not returned to June highs.
Benchmark crude for October delivery was down 88 cents at $71.16 a barrel by late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract gave up 43 cents Friday to settle at $72.04 a barrel.
The recession has sapped American fuel consumption, and US oil stockpiles are 14% larger than last year even as recent data suggests the economy is clawing out of recession.
The Energy Information Administration said Wednesday that the country also is sitting on a sea of distillate fuels including heating oil, with stockpiles approaching a 27-year high.
"Most of the macro data from the US over the last month has been suppor-tive of oil prices," said David Moore,commodity strategist at Commonwealth Bank of Australia in Sydney. "But inventories remain high and demand is weak, so that's capping prices.'
Moore said crude will likely average $64 a barrel in the fourth quarter before rising to average $80 in the October to December period of 2010.
In other Nymex trading, gasoline for October delivery slipped 1.58 cents to $1.8166 a gallon, and heating oil fell 1.74 cents to $1.8105 a gallon. Natural gas fell 5.0 cents to $3.728 per 1,000 cubic feet.
In London, Brent crude fell $1.07 to $70.27 on the ICE Futures exchange.
"Oil is stalling ahead of the fourth quar ter and we expect a gradual pick-up in volatility at the ver y end of September," said VTB Capital analyst Andrey Kryuchenkov.
"We still believe that the upside is capped at the moment and we do not expect significant gains until October.'
Crude oil fell on Friday, under pressure from a slightly stronger dollar and as many traders chose to take profits.
The dollar's small appreciation also weighed on dollar-priced oil, making it more expensive for buyers using other currencies.
"The petroleum complex was softer on Friday as the US dollar mounted a comeback," analysts at John Hall Associates wrote in a note to clients.
The dollar's overall weakening trend _it sank to a near-year low against the euro last week _has been price-supportive of oil and other commodities.
Oil also won support last week from weekly official data showing a large decrease in US crude reserves.
The decline was seen as an indication that US oil demand was improving but some analysts cautioned that its stockpiles remained huge and pr ices had not returned to June highs.
CONSTRUCTION MATERIALS PRICES TO BE CONTROLLED
Producers of construction materials will be allowed to hike their retail prices if the price of diesel increases another Bt5 a litre, the Commerce Ministry said yesterday.
The unavoidable increase of Bt5 a litre will directly affect transportation costs and the production costs of manufacturers, it said.
Construction materials are on a list of goods for which prices are controlled. The ministry recently extended price-control measures on the list of goods until the end of the year.
High on the ministry's agenda at present is the enhancement of domestic consumption in line with the government's Thai Khemkhaeng project.
Commerce Minister Porntiva Nakasai said that the ministry would attempt to curb price increases for construction materials until the end of this year to help shoulder consumers' expenses.
"Money from the Thai Khemkhaeng project, which will soon be injected into public investment, will partly stimulate growth in the construction industry. The government will try to curb the retail prices of these products to ensure a lower burden on consumers, while traders will not take the opportunity to increase their retail prices," Porntiva said.
After inspecting the prices of construction materials on Monday, the ministry found that most prices were within its recommendations.
As of September 2, the price of steel rod had increased slightly from Bt107.29 in August to Bt109.78, or from Bt21,500 to Bt22,000 per tonne. The retail price of mixed cement (Tiger brand) is quoted at Bt135 to Bt142 per 50-kilo bag, lower than the ministry's recommended price of Bt144 per bag. Portland cement (Elephant brand) is quoted at Bt145 to Bt156 per bag, while the recommended price is Bt161.
Internal Trade Department director-general Yangyong Phuangrach said the ministry would only consider allowing steel prices to increase if domestic diesel prices rose by another Bt5 per litre.
"The department will control prices as there are no serious negative factors to increase production costs for the remainder of this year," he said.
Moreover, he said the department would not allow any producers, in particular producers of condensed milk, soda and canned fruits, to increase their retail prices as sugar prices remain unchanged.
Commerce Minister Porntiva Nakasai said that the ministry would attempt to curb price increases for construction materials until the end of this year to help shoulder consumers' expenses.
The unavoidable increase of Bt5 a litre will directly affect transportation costs and the production costs of manufacturers, it said.
Construction materials are on a list of goods for which prices are controlled. The ministry recently extended price-control measures on the list of goods until the end of the year.
High on the ministry's agenda at present is the enhancement of domestic consumption in line with the government's Thai Khemkhaeng project.
Commerce Minister Porntiva Nakasai said that the ministry would attempt to curb price increases for construction materials until the end of this year to help shoulder consumers' expenses.
"Money from the Thai Khemkhaeng project, which will soon be injected into public investment, will partly stimulate growth in the construction industry. The government will try to curb the retail prices of these products to ensure a lower burden on consumers, while traders will not take the opportunity to increase their retail prices," Porntiva said.
After inspecting the prices of construction materials on Monday, the ministry found that most prices were within its recommendations.
As of September 2, the price of steel rod had increased slightly from Bt107.29 in August to Bt109.78, or from Bt21,500 to Bt22,000 per tonne. The retail price of mixed cement (Tiger brand) is quoted at Bt135 to Bt142 per 50-kilo bag, lower than the ministry's recommended price of Bt144 per bag. Portland cement (Elephant brand) is quoted at Bt145 to Bt156 per bag, while the recommended price is Bt161.
Internal Trade Department director-general Yangyong Phuangrach said the ministry would only consider allowing steel prices to increase if domestic diesel prices rose by another Bt5 per litre.
"The department will control prices as there are no serious negative factors to increase production costs for the remainder of this year," he said.
Moreover, he said the department would not allow any producers, in particular producers of condensed milk, soda and canned fruits, to increase their retail prices as sugar prices remain unchanged.
Commerce Minister Porntiva Nakasai said that the ministry would attempt to curb price increases for construction materials until the end of this year to help shoulder consumers' expenses.
Monday, September 21, 2009
IN SEARCH OF A BIOFUEL BONANZA
Thailand wants Asean to take the lead in creating and controlling the market for alternative fuels, but political and environmental challenges are daunting. By Yuthana Praiwan
In recent decades, the petroleumrich Middle East lapped up profits from parts of the world that lack that vital resource.Now that global supplies of oil are dwindling, Thailand believes Asean's agriculture sector has the potential to become a leader in biofuels.
Following the Middle East's Organisation for Petroleum Exporting Countries (Opec), Thailand's Energy Ministry has pitched an "Opec for Biofuels" to its Asean friends.
Biofuels are defined as liquid or gas fuels derived from biomass including crops, and they produce far lower carbon emissions than fossil fuels such as coal and petroleum.
Sarawut Kaewthip, senior planning and policy analyst from the Energy Ministry, said some countries in the region clearly had vast potential to become major exporters of biofuels, but there was still a long way to go before the region could create the equivalent of an Opec for the commodity.
"The collaboration must be very close between leading producers Indonesia,Malaysia and Thailand. It could take many years of price increases and drops for them to learn how to control the market," said Dr Sarawut.
World trade conditions have also changed dramatically since the formation of Opec, making a biofuel cartel tougher to arrange for policymakers and private operators, said Dr Sarawut.
"The Thai government sees the readiness and plentifulness of biofuel resources not used for food production.From now on the three big players have to co-develop their resources to set up an Opec of biofuels and also prevent deforestation," he said.
"But we have to accept that biofuel cannot completely replace fossil oil;biofuels are only another choice for countries that want to reduce dependency on oil imports or cut greenhouse gases."
The Energy Ministry and the International Energy Agency both expect that biofuels could replace up to 25%of fossil oils in the transport sector by 2030, a significant leap from 1.5% this year.
Biofuels could supply 30 million barrels per day 20 years from now compared to total fossil oil demand today of 85-86 million bpd.
"If Asean could limit biofuel production in Asia-Pacific to only 500,000 to 600,000 barrels of supply, we could dominate the regional price," Dr Sarawut said.
"But how many years or decades from now that happens depend on the attention devoted by each government and the private sector.
"Thailand is the world's largest exporter of cassava and second largest for sugar, but there is no value added to these commodities. If you develop them to be ethanol and biofuels we can sell them at a higher price and a higher margin."
He said Brazil controlled ethanol prices as the world's largest exporter and it could be a major partner to Asean as Brazil emphasises the Atlantic Ocean market while Asean would focus on the Pacific.
Biofuel development is tough but needs to be done quickly, said Capt Dr Samai Jai-Indr, an energy expert with the Royal Thai Navy and a member of the House of Representatives Energy Committee.
He warned that industrialised countries would keep their eyes on the biofuels industry.
Europe, the United States and East Asia will never welcome biofuels unless they can secure their own resources in some way, he said.
"The companies that benefit from exploration and production in the Middle East - the US's Chevron, Royal Dutch Shell from the Netherlands and Britain, Total of France, BP of Britain and Mitsubishi of Japan - are all from developed countries that dominate the natural resources of other countries,"said Dr Samai.
"They may move fast to control world fuel plantation areas including those here in Asean. If [developed countries]can't control the industry, they would seek ways such as human rights, the environment or increased food prices to slow demand in the industry because otherwise they would have to depend on imported biofuels.
"Look at Brazil for an example. Its private and public sectors withstood complaints by developed countries that Brazil's sugarcane plantations demolished parts of the Amazon forest."
Now some developed countries buy biofuel resources in Africa and Latin America.
Dr Samai suggested biofuel producers explore opportunities in Burma and Indochina, as they possess the proper climate for fuel crops and have low labour costs.
Meanwhile, Srihasak Arirachakaran,executive director of Thai Agro Ethanol,one of the first ethanol producers in Thailand, hopes to see an organisation materialise.
"Yet these are very much rhetorical,academic questions as there are many hurdles to overcome, not just the wills of leaders," said Dr Srihasak.
Thailand is in an early stage of biofuel development as the cost of production is still too high and the whole industry needs to develop from upstream to downstream, said Dr Srihasak.
"It is important to consider crop yields, proximity, sourcing and distribution. In the meantime, each government needs to monitor closely what it needs and what it can export to assure sufficient supply for the region. This is not difficult if ministers co-operate."
Biofuels are appropriate for mature economies such as Europe, Japan and North America, where governments are tackling emission problems by replacing fossil fuels with biofuels and subsidising green fuel prices, said Dr Srihasak.
While the Thai government believes in the fast development of the techno-
ogy, Dr Sarawut points out that the new generation of biofuel technology should focus on making it commercially viable.
Malaysia and Indonesia,the world's largest and secondSamai: Developed largest exporters nations seek control of palm oil, have shown interest in an Asean biofuel Opec.
Dadan Kusdiana, Indonesia's Ministry of Energy and Mineral Resources representative, said Indonesia was ready to collaborate with other countries, particularly the Asean region.
Biofuels development is on the national agenda as Indonesia hopes to not only curb fossil fuel imports but also improve local employment and standards of living.
Indonesia set a target for renewable energy of 17% of total energy use in 2025 by providing incentives for investment and subsidising costs for some types of renewables.
"There is no deforestation here and we are researching ways to find efficient land uses and increase productivity,"he said.
Malaysia's Ministry of Plantation Industries and Commodities says its development of biodiesel is aimed at reducing dependence on fossil fuels and protecting the environment, even though using palm oil for biodiesel is not economically viable.
Since 2006, Malaysia has encouraged innovative local biodiesel production technology for normal and winter-area grade biodiesel; namely, Malaysia Palm Oil Biofuel. Now the technology has been exported to Thailand and South Korea.
"The move to develop biofuels does not come from the cost of fossil fuels,but to generate a return for local agriculture and industries involved with this sector," said a Malaysian report.
In recent decades, the petroleumrich Middle East lapped up profits from parts of the world that lack that vital resource.Now that global supplies of oil are dwindling, Thailand believes Asean's agriculture sector has the potential to become a leader in biofuels.
Following the Middle East's Organisation for Petroleum Exporting Countries (Opec), Thailand's Energy Ministry has pitched an "Opec for Biofuels" to its Asean friends.
Biofuels are defined as liquid or gas fuels derived from biomass including crops, and they produce far lower carbon emissions than fossil fuels such as coal and petroleum.
Sarawut Kaewthip, senior planning and policy analyst from the Energy Ministry, said some countries in the region clearly had vast potential to become major exporters of biofuels, but there was still a long way to go before the region could create the equivalent of an Opec for the commodity.
"The collaboration must be very close between leading producers Indonesia,Malaysia and Thailand. It could take many years of price increases and drops for them to learn how to control the market," said Dr Sarawut.
World trade conditions have also changed dramatically since the formation of Opec, making a biofuel cartel tougher to arrange for policymakers and private operators, said Dr Sarawut.
"The Thai government sees the readiness and plentifulness of biofuel resources not used for food production.From now on the three big players have to co-develop their resources to set up an Opec of biofuels and also prevent deforestation," he said.
"But we have to accept that biofuel cannot completely replace fossil oil;biofuels are only another choice for countries that want to reduce dependency on oil imports or cut greenhouse gases."
The Energy Ministry and the International Energy Agency both expect that biofuels could replace up to 25%of fossil oils in the transport sector by 2030, a significant leap from 1.5% this year.
Biofuels could supply 30 million barrels per day 20 years from now compared to total fossil oil demand today of 85-86 million bpd.
"If Asean could limit biofuel production in Asia-Pacific to only 500,000 to 600,000 barrels of supply, we could dominate the regional price," Dr Sarawut said.
"But how many years or decades from now that happens depend on the attention devoted by each government and the private sector.
"Thailand is the world's largest exporter of cassava and second largest for sugar, but there is no value added to these commodities. If you develop them to be ethanol and biofuels we can sell them at a higher price and a higher margin."
He said Brazil controlled ethanol prices as the world's largest exporter and it could be a major partner to Asean as Brazil emphasises the Atlantic Ocean market while Asean would focus on the Pacific.
Biofuel development is tough but needs to be done quickly, said Capt Dr Samai Jai-Indr, an energy expert with the Royal Thai Navy and a member of the House of Representatives Energy Committee.
He warned that industrialised countries would keep their eyes on the biofuels industry.
Europe, the United States and East Asia will never welcome biofuels unless they can secure their own resources in some way, he said.
"The companies that benefit from exploration and production in the Middle East - the US's Chevron, Royal Dutch Shell from the Netherlands and Britain, Total of France, BP of Britain and Mitsubishi of Japan - are all from developed countries that dominate the natural resources of other countries,"said Dr Samai.
"They may move fast to control world fuel plantation areas including those here in Asean. If [developed countries]can't control the industry, they would seek ways such as human rights, the environment or increased food prices to slow demand in the industry because otherwise they would have to depend on imported biofuels.
"Look at Brazil for an example. Its private and public sectors withstood complaints by developed countries that Brazil's sugarcane plantations demolished parts of the Amazon forest."
Now some developed countries buy biofuel resources in Africa and Latin America.
Dr Samai suggested biofuel producers explore opportunities in Burma and Indochina, as they possess the proper climate for fuel crops and have low labour costs.
Meanwhile, Srihasak Arirachakaran,executive director of Thai Agro Ethanol,one of the first ethanol producers in Thailand, hopes to see an organisation materialise.
"Yet these are very much rhetorical,academic questions as there are many hurdles to overcome, not just the wills of leaders," said Dr Srihasak.
Thailand is in an early stage of biofuel development as the cost of production is still too high and the whole industry needs to develop from upstream to downstream, said Dr Srihasak.
"It is important to consider crop yields, proximity, sourcing and distribution. In the meantime, each government needs to monitor closely what it needs and what it can export to assure sufficient supply for the region. This is not difficult if ministers co-operate."
Biofuels are appropriate for mature economies such as Europe, Japan and North America, where governments are tackling emission problems by replacing fossil fuels with biofuels and subsidising green fuel prices, said Dr Srihasak.
While the Thai government believes in the fast development of the techno-
ogy, Dr Sarawut points out that the new generation of biofuel technology should focus on making it commercially viable.
Malaysia and Indonesia,the world's largest and secondSamai: Developed largest exporters nations seek control of palm oil, have shown interest in an Asean biofuel Opec.
Dadan Kusdiana, Indonesia's Ministry of Energy and Mineral Resources representative, said Indonesia was ready to collaborate with other countries, particularly the Asean region.
Biofuels development is on the national agenda as Indonesia hopes to not only curb fossil fuel imports but also improve local employment and standards of living.
Indonesia set a target for renewable energy of 17% of total energy use in 2025 by providing incentives for investment and subsidising costs for some types of renewables.
"There is no deforestation here and we are researching ways to find efficient land uses and increase productivity,"he said.
Malaysia's Ministry of Plantation Industries and Commodities says its development of biodiesel is aimed at reducing dependence on fossil fuels and protecting the environment, even though using palm oil for biodiesel is not economically viable.
Since 2006, Malaysia has encouraged innovative local biodiesel production technology for normal and winter-area grade biodiesel; namely, Malaysia Palm Oil Biofuel. Now the technology has been exported to Thailand and South Korea.
"The move to develop biofuels does not come from the cost of fossil fuels,but to generate a return for local agriculture and industries involved with this sector," said a Malaysian report.
Rocky road ahead to "Green Opec"
Despite certain advantages Asean countries have in producing biofuels,competition remains intense, making the path toward an "Opec of Biofuels"anything but smooth, according to Richard Jones, deputy executive director of the International Energy Agency (IEA).
"I think that would be impossible [for Asean to form an Opec of Biofuels]because, unlike oil, biofuels are based on agriculture and any culture has agricultural potential," Mr Jones said in Bangkok recently.
If supply is not limited, collaborative efforts to control prices would not be feasible, he added.
"But I do think that, as with any traded goods, the countries that have a comparative advantage will be the countries that become the most important producers. I think that in that regard, because of your climate, fertile soils and plenty of water, I think that there will be a comparative advantage."
Apart from being close to large markets such as China, Asean countries have experience in growing the necessary and most appropriate crops for biofuels, he said.
Thailand, however, should switch from producing ethanol from molasses directly to using sugar juice from sugarcane.This would result in achieving full efficiency, said Mr Jones.
Energy Minister Wannarat Channukul said at the recent Bangkok Biofuel 2009 seminar that Asean countries had the potential to be an export hub for biofuels and alternative energy.
Paolo Frankl, head of the IEA's Renewable Energy division, cautions that biofuels will never become widely used in transport.
"I think it's important to realise that biofuels will never substitute for 100%of transport fuels," he said."In the long term, our projection is that they will arrive at 25% by 2050. But they will be an important part of the solution and Asean countries can play a very good role, in particular for regional markets and also to some extent for European markets, but there still will be a difference to Opec."
He explained that this was due to the availability of land resources and environmental challenges.
An integrated approach that looks at the management of natural resources in the most efficient manner possible should be undertaken by Asean countries.
Making sure that biofuel production does not limit the availability of food for the population, for instance, should be the first priority, said Mr Frankl.
Brazil, for instance, burns the leftover residue from the sugarcane used to produce ethanol for power generation for its mills. The excess electricity is then sold.
In the longer term, the task should be to develop more non-food feedstocks through the introduction of secondgeneration technologies. This will require time and international collaboration, said Mr Frankl.
In the meantime, Mr Jones recommended countries in Asean to develop certification procedures not only to overcome non-tariff barriers but also to earn a reputation among consumers.
"Certification can sometimes allow you to charge a premium price for your product if you can point to a certification that shows your feedstocks were raised in an environmentally friendly manner."
For instance, cutting down a forest to make way for sugarcane releases tremendous amounts of carbon dioxide.
"I think that would be impossible [for Asean to form an Opec of Biofuels]because, unlike oil, biofuels are based on agriculture and any culture has agricultural potential," Mr Jones said in Bangkok recently.
If supply is not limited, collaborative efforts to control prices would not be feasible, he added.
"But I do think that, as with any traded goods, the countries that have a comparative advantage will be the countries that become the most important producers. I think that in that regard, because of your climate, fertile soils and plenty of water, I think that there will be a comparative advantage."
Apart from being close to large markets such as China, Asean countries have experience in growing the necessary and most appropriate crops for biofuels, he said.
Thailand, however, should switch from producing ethanol from molasses directly to using sugar juice from sugarcane.This would result in achieving full efficiency, said Mr Jones.
Energy Minister Wannarat Channukul said at the recent Bangkok Biofuel 2009 seminar that Asean countries had the potential to be an export hub for biofuels and alternative energy.
Paolo Frankl, head of the IEA's Renewable Energy division, cautions that biofuels will never become widely used in transport.
"I think it's important to realise that biofuels will never substitute for 100%of transport fuels," he said."In the long term, our projection is that they will arrive at 25% by 2050. But they will be an important part of the solution and Asean countries can play a very good role, in particular for regional markets and also to some extent for European markets, but there still will be a difference to Opec."
He explained that this was due to the availability of land resources and environmental challenges.
An integrated approach that looks at the management of natural resources in the most efficient manner possible should be undertaken by Asean countries.
Making sure that biofuel production does not limit the availability of food for the population, for instance, should be the first priority, said Mr Frankl.
Brazil, for instance, burns the leftover residue from the sugarcane used to produce ethanol for power generation for its mills. The excess electricity is then sold.
In the longer term, the task should be to develop more non-food feedstocks through the introduction of secondgeneration technologies. This will require time and international collaboration, said Mr Frankl.
In the meantime, Mr Jones recommended countries in Asean to develop certification procedures not only to overcome non-tariff barriers but also to earn a reputation among consumers.
"Certification can sometimes allow you to charge a premium price for your product if you can point to a certification that shows your feedstocks were raised in an environmentally friendly manner."
For instance, cutting down a forest to make way for sugarcane releases tremendous amounts of carbon dioxide.
EXPLORATION RIGHTS BIDDING NEXT YEAR
The Mineral Fuels Department next year plans to open the 21st round of bidding by companies for exploration rights to petroleum fields.
Kurujit Nakarntap, director-general of the department, said last week that most of the fields had already been surveyed but the four-year term of exploration rights had expired.
He was confident that this new round would attract many applicants.
In the last round two years ago, the department invited companies to explore 65 fields, of which 56 were on land, totalling 211,687 square metres, and nine were in the Gulf of Thailand, totalling 23,919 square kilometres.
If the companies find oil and want to start pumping, they have to apply for a production concession from the department.
The department expects to collect Bt44 billion in production concession fees this year, plus Bt88 billion from concession holders in the Malaysia-Thailand Joint Development Area in the Gulf of Thailand.
The department estimates that investment in petroleum exploration and production this year would match last year's Bt130 billion.
The country produces 90,000 barrels per day of condensate and 150,000bpd of crude oil, while the production of 2.7 billion cubic feet per day of natural gas is lower than domestic demand.
Kurujit Nakarntap, director-general of the department, said last week that most of the fields had already been surveyed but the four-year term of exploration rights had expired.
He was confident that this new round would attract many applicants.
In the last round two years ago, the department invited companies to explore 65 fields, of which 56 were on land, totalling 211,687 square metres, and nine were in the Gulf of Thailand, totalling 23,919 square kilometres.
If the companies find oil and want to start pumping, they have to apply for a production concession from the department.
The department expects to collect Bt44 billion in production concession fees this year, plus Bt88 billion from concession holders in the Malaysia-Thailand Joint Development Area in the Gulf of Thailand.
The department estimates that investment in petroleum exploration and production this year would match last year's Bt130 billion.
The country produces 90,000 barrels per day of condensate and 150,000bpd of crude oil, while the production of 2.7 billion cubic feet per day of natural gas is lower than domestic demand.
Snack-maker UM to open more stores at PTT stations
UM Tridaughter Sweet (UM), the maker and franchiser of Kanom Baan Ayakarn Thai Cake snacks, has opted to expand its network of outlets to PTT petrol stations, rather than shopping malls, in a bid to tap more families.
UM director Nuttaya Sawatpoon said the company has 23 Kanom Baan Ayakarn shops in shopping malls, which should be enough to serve that market. It has decided to focus more on opening shops in new types of locations. Petrol stations are seen as a way of expanding into the family market.
"Consumers in the family segment shop at convenience stores, bakery shops and coffee shops when the family vehicle is filled up at the petrol station," Nuttaya said. Moreover, the rents at petrol stations are not high, she said.Kanom Baan Ayakarn already has three shops at PTT petrol stations. Newer PTT-based outlets would be smaller than these, however.
The company believes the expansion into PTT's petrol stations will boost its revenue to Bt150 million next year, from an expected Bt100 million this year.
The sweet-maker is following the example of Siam Hands, the maker of Tangmo-brand apparel, which recently began opening shops at PTT petrol stations, believing the network of 1,400 stations nationwide, and the purchasing power of its customers, could help boost its profits.
Nuttaya said UM will open five shops in the fourth quarter of this year, four of which will be located at PTT stations. The plan is expected to require investment of at least Bt500,000 per PTT shop.
The fifth shop is a franchise in Hat Yai, Songkhla.
Nuttaya said the five new shops are expected to offset a decline in sales in the second quarter.
"We need to be aggressive in opening new shops, as the domestic economy is improving. This year the company targets sales of Bt100 million, up from Bt97 million last year," she said. The company will have 38 shops by the end of this year, up from 33 at present. Five of the shops are run by franchisees. The rest are UM's own shops.
Nuttaya said the company plans to open at least 10 new franchise stores next year.
Expansion through franchisees is expected to grow, she said, adding that the company is in negotiations with investors in Nakhon Pathom, Ayutthaya and Suphan Buri.
UM director Nuttaya Sawatpoon said the company has 23 Kanom Baan Ayakarn shops in shopping malls, which should be enough to serve that market. It has decided to focus more on opening shops in new types of locations. Petrol stations are seen as a way of expanding into the family market.
"Consumers in the family segment shop at convenience stores, bakery shops and coffee shops when the family vehicle is filled up at the petrol station," Nuttaya said. Moreover, the rents at petrol stations are not high, she said.Kanom Baan Ayakarn already has three shops at PTT petrol stations. Newer PTT-based outlets would be smaller than these, however.
The company believes the expansion into PTT's petrol stations will boost its revenue to Bt150 million next year, from an expected Bt100 million this year.
The sweet-maker is following the example of Siam Hands, the maker of Tangmo-brand apparel, which recently began opening shops at PTT petrol stations, believing the network of 1,400 stations nationwide, and the purchasing power of its customers, could help boost its profits.
Nuttaya said UM will open five shops in the fourth quarter of this year, four of which will be located at PTT stations. The plan is expected to require investment of at least Bt500,000 per PTT shop.
The fifth shop is a franchise in Hat Yai, Songkhla.
Nuttaya said the five new shops are expected to offset a decline in sales in the second quarter.
"We need to be aggressive in opening new shops, as the domestic economy is improving. This year the company targets sales of Bt100 million, up from Bt97 million last year," she said. The company will have 38 shops by the end of this year, up from 33 at present. Five of the shops are run by franchisees. The rest are UM's own shops.
Nuttaya said the company plans to open at least 10 new franchise stores next year.
Expansion through franchisees is expected to grow, she said, adding that the company is in negotiations with investors in Nakhon Pathom, Ayutthaya and Suphan Buri.
Saturday, September 19, 2009
Leak won't hurt PTTEP financially
The performance of PTT Exploration and Production (PTTEP) should not be affected by an oil spill from one of its wells off Western Australia, although environmentalists say the damage could be worse than feared, say stock analysts.
Oil and gas condensate has been leaking from a well in the offshore Montara field owned by PTTEP since Aug 20.
Conservation groups expressed concern that the cleanup may take longer than the company has estimated, and that the damage may be severe.
However, DBS Vickers Securities said work to stop the leak was still on the 50-day schedule from Aug 20. The cleanup expense is also likely to be covered by a US$75-million insurance policy.
About 1,200 tonnes of oil are estimated to have leaked into the Timor Sea to date.
"This is a disaster that risks blowing out further in terms of its scale and impact on the ocean," said Darren Kindleysides, director of the Australian Marine Conservation Society.
The spill has covered 15,000 square kilometres, with 400 barrels a day leaking from the field, he said.
The leak developed 3,500 metres below the ocean floor during drilling by the Thai company's subsidiary, PTTEP Australasia. Halting the flow by drilling a relief well to plug the leak with mud is expected to take about 25 more days,PTTEP said yesterday.
Australian Maritime Safety Authority observations indicate the size of the spill is reducing, said Lauren Tindale, a Perth-based spokeswoman for PTTEP Australasia.
Vichitr Kuladejkhuna, a DBS analyst,maintained his previous estimate that the incident may cost the company between US$10 million and $50 million,depending on how well and quickly it controls the situation and limits the damage.
Damages in the range of $10-50 million would result in a drop of PTTEP's profit by 6% next year from this year,said Mr Vichitr.
Bualuang Research analyst Thanatthep Chandrakarn agreed that the expense should not be more than the $75 million estimated earlier.
However, according to Mr Thanatthep, the company may set aside an additional $50 million for unexpected additional costs such as compensation in case the Australian government or a third party sues the company for environmental contamination.
"In a worst-case scenario, we believe that the operation of the Montara field would be delayed by 60 days, with a drop of profit by 5.6% for 2010 from this year. As well, overall expenses should not pressure the company's performance,[but] might have affected its share prices in the short term," said Mr Thanatthep.
A statement that PTTEP released on Thursday said that work began on Wednesday to drill a 17.5-inch diameter hole to a depth of 1,622 metres and was expected to be completed over the weekend.
It follows the successful drilling of an initial 26-inch diameter hole to a depth of 149 metres and a 20-inch conductor pipe being run through and cemented into position on Tuesday.
The total operation to drill to a depth of 2.6 km to intersect the existing well and allow for the injection of heavy mud to stop the flow is expected to take about three-and-a-half weeks, it said.
Shares of PTTEP closed yesterday on the Stock Exchange of Thailand at 146.5 baht, up 50 satang, in trade worth 518.4 million baht.
Oil and gas condensate has been leaking from a well in the offshore Montara field owned by PTTEP since Aug 20.
Conservation groups expressed concern that the cleanup may take longer than the company has estimated, and that the damage may be severe.
However, DBS Vickers Securities said work to stop the leak was still on the 50-day schedule from Aug 20. The cleanup expense is also likely to be covered by a US$75-million insurance policy.
About 1,200 tonnes of oil are estimated to have leaked into the Timor Sea to date.
"This is a disaster that risks blowing out further in terms of its scale and impact on the ocean," said Darren Kindleysides, director of the Australian Marine Conservation Society.
The spill has covered 15,000 square kilometres, with 400 barrels a day leaking from the field, he said.
The leak developed 3,500 metres below the ocean floor during drilling by the Thai company's subsidiary, PTTEP Australasia. Halting the flow by drilling a relief well to plug the leak with mud is expected to take about 25 more days,PTTEP said yesterday.
Australian Maritime Safety Authority observations indicate the size of the spill is reducing, said Lauren Tindale, a Perth-based spokeswoman for PTTEP Australasia.
Vichitr Kuladejkhuna, a DBS analyst,maintained his previous estimate that the incident may cost the company between US$10 million and $50 million,depending on how well and quickly it controls the situation and limits the damage.
Damages in the range of $10-50 million would result in a drop of PTTEP's profit by 6% next year from this year,said Mr Vichitr.
Bualuang Research analyst Thanatthep Chandrakarn agreed that the expense should not be more than the $75 million estimated earlier.
However, according to Mr Thanatthep, the company may set aside an additional $50 million for unexpected additional costs such as compensation in case the Australian government or a third party sues the company for environmental contamination.
"In a worst-case scenario, we believe that the operation of the Montara field would be delayed by 60 days, with a drop of profit by 5.6% for 2010 from this year. As well, overall expenses should not pressure the company's performance,[but] might have affected its share prices in the short term," said Mr Thanatthep.
A statement that PTTEP released on Thursday said that work began on Wednesday to drill a 17.5-inch diameter hole to a depth of 1,622 metres and was expected to be completed over the weekend.
It follows the successful drilling of an initial 26-inch diameter hole to a depth of 149 metres and a 20-inch conductor pipe being run through and cemented into position on Tuesday.
The total operation to drill to a depth of 2.6 km to intersect the existing well and allow for the injection of heavy mud to stop the flow is expected to take about three-and-a-half weeks, it said.
Shares of PTTEP closed yesterday on the Stock Exchange of Thailand at 146.5 baht, up 50 satang, in trade worth 518.4 million baht.
Oil below $72 on concerns economic recovery slow
Oil prices weakened ye sterday in Asia, dampened by concerns that a recovery in the US economy may be slower than expected.
Benchmark crude for October delivery fell 81 cents to $71.66 a barrel at late afternoon Singapore time in electronic trading on the New York Me rcantile Exchange. The contr act fell 3 cents to settle at $72.47 on Thursday.
Victor S hum, an energy analyst with consultancy Pur vin & Gertz in Singapore, said oil prices pulled back in tandem with a slide in regional stock markets and a stronger US dollar.
The moves followed new US government data indicating a slow economic recovery, which may mean less demand for energy by the world's largest crude user in the near term.
"There is a supply overhang in both crude oil and products. Oil pricing at a $70 plus level is quite vulnerable given the weak fundamentals," Shum said.
The recession has sapped American fuel consumption, and US oil stockpiles are 14% larger than last year. The Energy I nfor mation Administration said Wednesday that the country also is sitting on a sea of distillate fuels including heating oil, with stockpiles approaching a 27-year high.
The government reported Thursday that natural gas stockpiles continue to grow as well and are now at 16.4%above the five-year aver age for this time of year.
There are some bright spots.The Labour Department said new claims for unemployment benefits fell to the lowest level since July. And the Commerce Department said housing construction in August surged to the highest level in nine months with a flurr y of new apar tment building projects.
While on the surface that would suggest energy consumption may rebound, the jobless numbers however, are far below levels that would indicate a healthy economy.
Shum said oil has traded within the $65-$75 a barrel since July and likely to stay within this range in the coming months.
In other Nymex trading, gasoline for October delivery slipped 0.72 cent to $1.8440 a gallon, and heating oil fell 0.8 cent to $1.8329 a gallon. Natural gas rose 6.7 cents to $3.515 per 1,000 cubic feet.
In London, Brent crude fell 71 cents to $70.84.
Shares in Asia followe d the New York lead yesterday after three days of gains.
Westmore said however that betterthan-expected economic data from the United States limited the fall in oil prices on hopes that energy demand will soon pick up in the world's largest economy and energy consumer.
Benchmark crude for October delivery fell 81 cents to $71.66 a barrel at late afternoon Singapore time in electronic trading on the New York Me rcantile Exchange. The contr act fell 3 cents to settle at $72.47 on Thursday.
Victor S hum, an energy analyst with consultancy Pur vin & Gertz in Singapore, said oil prices pulled back in tandem with a slide in regional stock markets and a stronger US dollar.
The moves followed new US government data indicating a slow economic recovery, which may mean less demand for energy by the world's largest crude user in the near term.
"There is a supply overhang in both crude oil and products. Oil pricing at a $70 plus level is quite vulnerable given the weak fundamentals," Shum said.
The recession has sapped American fuel consumption, and US oil stockpiles are 14% larger than last year. The Energy I nfor mation Administration said Wednesday that the country also is sitting on a sea of distillate fuels including heating oil, with stockpiles approaching a 27-year high.
The government reported Thursday that natural gas stockpiles continue to grow as well and are now at 16.4%above the five-year aver age for this time of year.
There are some bright spots.The Labour Department said new claims for unemployment benefits fell to the lowest level since July. And the Commerce Department said housing construction in August surged to the highest level in nine months with a flurr y of new apar tment building projects.
While on the surface that would suggest energy consumption may rebound, the jobless numbers however, are far below levels that would indicate a healthy economy.
Shum said oil has traded within the $65-$75 a barrel since July and likely to stay within this range in the coming months.
In other Nymex trading, gasoline for October delivery slipped 0.72 cent to $1.8440 a gallon, and heating oil fell 0.8 cent to $1.8329 a gallon. Natural gas rose 6.7 cents to $3.515 per 1,000 cubic feet.
In London, Brent crude fell 71 cents to $70.84.
Shares in Asia followe d the New York lead yesterday after three days of gains.
Westmore said however that betterthan-expected economic data from the United States limited the fall in oil prices on hopes that energy demand will soon pick up in the world's largest economy and energy consumer.
GREEN HURDLES LOOM FOR EIGHT PROJECTS
Upstream and downstream petrochemical plants as well as nuclear power plants are on the list of eight industrial projects with a "serious impact" on local communities that was recently issued by the Industry Ministry.
Appearing on the list means these projects must pass health-impact assessments, receive local communities' endorsement in a hearing and win approval from an independent environmental body to be set up by the Natural Resource and Environment Ministry under the auspices of Article 67 of the Constitution.
The other six project activities covered by the list are underground mining; lead and zinc mines; chemical-based mineral dissolving and upstream steel production with daily minimum capacity of 20,000 tonnes; industrial estates for upstream steel production or upstream to midstream petrochemical plants; dumping sites and kilns for hazardous wastes; and fossil-fuel power plants (except gas-fired plants) with minimum capacity of 100 megawatts.
Vice Industry Minister Sorayud Petchtrakul yesterday said Minister Charnchai Chairungrueng had endorsed the list this past Monday.
"We have no choice but to issue the list, in order to comply with the law," he said.
Department director-general Witoon Simachokedee said his agency had already approved operating licences for 12 projects with a combined value of Bt59 billion.
So far, only PTT's gas-separation plant, which is not on the list of serious-impact activities, is awaiting department approval.
LAWSUIT
Nevertheless, even though the list has been declared, in accordance with the government's resolution, the projects can proceed in the absence of the independent environment body.
Suthi Atchasai, coordinator of a citizens' network on the Eastern Seaboard, yesterday said the network would soon file suit against the National Environmental Board for approving the environmental impact assessment for 55 projects slated for the industrialised zone in Rayong's Map Ta Phut.
Most of those projects are petrochemical projects of PTT, the Siam Cement Group and Dow Chemical.
Prime Minister Abhisit Vejjajiva yesterday told villagers from Map Ta Phut that not all of the 55 projects in the area were causing environmental problems. Villagers should consider each on a case-by-case basis.
He insisted there should not be a consensus that investment in Map Ta Phut must be frozen.
"Personally, some of them can proceed," he said.
He also mentioned the possibility of declaring Map Ta Phut a special administrative zone. With its own autonomy, the zone would demonstrate unity and "speedy and united" decisions, Abhisit said.
He also believes public access to the zone will be granted. However, a law must be enforced to push through the idea.
Abhisit said he was pushing for a conclusion to determine if Map Ta Phut should become a special administrative zone.
He said government measures to contain the environmental impact in Map Ta Phut would be designed in a framework that could be enforced in other areas.
Appearing on the list means these projects must pass health-impact assessments, receive local communities' endorsement in a hearing and win approval from an independent environmental body to be set up by the Natural Resource and Environment Ministry under the auspices of Article 67 of the Constitution.
The other six project activities covered by the list are underground mining; lead and zinc mines; chemical-based mineral dissolving and upstream steel production with daily minimum capacity of 20,000 tonnes; industrial estates for upstream steel production or upstream to midstream petrochemical plants; dumping sites and kilns for hazardous wastes; and fossil-fuel power plants (except gas-fired plants) with minimum capacity of 100 megawatts.
Vice Industry Minister Sorayud Petchtrakul yesterday said Minister Charnchai Chairungrueng had endorsed the list this past Monday.
"We have no choice but to issue the list, in order to comply with the law," he said.
Department director-general Witoon Simachokedee said his agency had already approved operating licences for 12 projects with a combined value of Bt59 billion.
So far, only PTT's gas-separation plant, which is not on the list of serious-impact activities, is awaiting department approval.
LAWSUIT
Nevertheless, even though the list has been declared, in accordance with the government's resolution, the projects can proceed in the absence of the independent environment body.
Suthi Atchasai, coordinator of a citizens' network on the Eastern Seaboard, yesterday said the network would soon file suit against the National Environmental Board for approving the environmental impact assessment for 55 projects slated for the industrialised zone in Rayong's Map Ta Phut.
Most of those projects are petrochemical projects of PTT, the Siam Cement Group and Dow Chemical.
Prime Minister Abhisit Vejjajiva yesterday told villagers from Map Ta Phut that not all of the 55 projects in the area were causing environmental problems. Villagers should consider each on a case-by-case basis.
He insisted there should not be a consensus that investment in Map Ta Phut must be frozen.
"Personally, some of them can proceed," he said.
He also mentioned the possibility of declaring Map Ta Phut a special administrative zone. With its own autonomy, the zone would demonstrate unity and "speedy and united" decisions, Abhisit said.
He also believes public access to the zone will be granted. However, a law must be enforced to push through the idea.
Abhisit said he was pushing for a conclusion to determine if Map Ta Phut should become a special administrative zone.
He said government measures to contain the environmental impact in Map Ta Phut would be designed in a framework that could be enforced in other areas.
Wednesday, September 16, 2009
China showers gifts on tiny, resources-rich island
"All this assistance from China to Timor Leste is full of sincerity and without any selfishness, unlike what the Western media has speculated."FU YUANCONG CHINA'S AMBASSADOR TO EAST TIMOR.
The capital Dili's gleaming new Presidential Palace and Foreign Ministry,gifts from China, stand in stark contrast to nearby burnt-out buildings and are symbols of how the energy-hungry superpower is growing closer to tiny,oil-rich East Timor.
In the 10 years since the independence vote that led to a split from Indonesia,China has spent more than US$53 million in aid to East Timor, also known as Timor Leste.
While that is just a fraction of the $760 million in Australian government aid, China has raised its profile in dusty Dili in several other ways. It is building big and showing generosity such as its donation of 8,000 tonnes of rice during a recent food crisis. Noticeable projects such as a new Ministry of Defence building, houses for soldiers and schools are under way as are scholarships and training programmes for civil servants.
In all, China is sending a very public message that it is serious about strengthening bilateral ties with East Timor, which many analysts put down to its desire to diversify strategic energy interests.
Loro Horta, who is a China expert at Singapore's Nanyang Technological University and is the son of East Timor's President Jose Ramos-Horta, said that the aid is linked to China's desire for energy and infrastructure contracts.
"The Chinese are desperate for oil,every single drop for them counts and they are definitely looking to Timor as potential to meet that need," he said.
East Timor is one of Asia's poorest and least developed countries, but it has enormous oil and gas reserves.
The Bayu Undan gas field is expected to reap $12-15 billion by 2023, according to the country's Natural Resources Minister Alfredo Pires. Bayu Undan is already the subject of a deal between Australia and East Timor but other, untapped reserves still need development partners.
Another oil field, Kitan, has an estimated 40 million barrels of recoverable light oil, Mr Pires said, and the Greater Sunrise field contains around 300 million barrels of condensate and 9.5 trillion cubic feet of gas, according to the United Nations.
Lucrative opportunities also exist in the minerals sector, including copper,gold, silver and marble, and for bigticket infrastructure projects as East Timor tries to reverse years of underinvestment.
Mr Pires said Spain, China and Australia are all keen on a piece of the Timor resources pie, while East Timor expert Damien Kingsbury from Deakin University said the United States and the United Kingdom are also interested.
China and East Timor's links date back centuries. Hakka Chinese traders sailed there more than 500 years ago looking for sandalwood, rosewood and mahogany. Many stayed on, forming an overseas Chinese community as in many other parts of Asia. Today, Dili's main street is lined with buildings, some of which display Chinese script, families can be seen praying at a Confucian temple in downtown Dili, while Chinese traders run appliance stores on busy streets. Chinese labourers are already at work on one of two heavy oil power plants which are under construction after Dili in 2008 awarded the Chinese Nuclear Industry 22nd Construction Company a $360 million contract to build the power plants and a national power grid. East Timor also paid $28 million for two petroleum vessels from China.
Mr Loro Horta said China is also angling for big ticket infrastructure contracts such as a pipeline that East Timor wants built from its Greater Sunrise oil field to a proposed processing plant on land.He said Chinese oil giant PetroChina has already done studies and is keen to drill.
"In 2004, PetroChina did a seismic study and said they didn't find much.But then, two years ago, I heard that they were willing to drill but they want exclusivity rights," he said.
Yang Donghui, a spokesman for the Chinese ambassador in Dili, said that the first phase of the seismic investigation was completed as an aid project, but that a proposed second phase investigation became the subject of commercial talks between the East Timor government and PetroChina.
China's ambassador to East Timor Fu Yuancong rejected speculation that China's interest in the fledgling nation is driven by a desire to gain an advantage when East Timor is handing out contracts to develop its billion-dollar oil and gas fields."All this assistance from China to Timor Leste is full of sincerity and without any selfishness, unlike what the Western media has speculated. The Chinese government never bore any political strategy in Timor Leste," he said.
According to Mr Loro Horta,"The growing Chinese presence is part of their natural expansion into Southeast Asia and I think Timor is not really their priority. But they are definitely keeping an eye on it. The Chinese are very patient and they think very long term."
The capital Dili's gleaming new Presidential Palace and Foreign Ministry,gifts from China, stand in stark contrast to nearby burnt-out buildings and are symbols of how the energy-hungry superpower is growing closer to tiny,oil-rich East Timor.
In the 10 years since the independence vote that led to a split from Indonesia,China has spent more than US$53 million in aid to East Timor, also known as Timor Leste.
While that is just a fraction of the $760 million in Australian government aid, China has raised its profile in dusty Dili in several other ways. It is building big and showing generosity such as its donation of 8,000 tonnes of rice during a recent food crisis. Noticeable projects such as a new Ministry of Defence building, houses for soldiers and schools are under way as are scholarships and training programmes for civil servants.
In all, China is sending a very public message that it is serious about strengthening bilateral ties with East Timor, which many analysts put down to its desire to diversify strategic energy interests.
Loro Horta, who is a China expert at Singapore's Nanyang Technological University and is the son of East Timor's President Jose Ramos-Horta, said that the aid is linked to China's desire for energy and infrastructure contracts.
"The Chinese are desperate for oil,every single drop for them counts and they are definitely looking to Timor as potential to meet that need," he said.
East Timor is one of Asia's poorest and least developed countries, but it has enormous oil and gas reserves.
The Bayu Undan gas field is expected to reap $12-15 billion by 2023, according to the country's Natural Resources Minister Alfredo Pires. Bayu Undan is already the subject of a deal between Australia and East Timor but other, untapped reserves still need development partners.
Another oil field, Kitan, has an estimated 40 million barrels of recoverable light oil, Mr Pires said, and the Greater Sunrise field contains around 300 million barrels of condensate and 9.5 trillion cubic feet of gas, according to the United Nations.
Lucrative opportunities also exist in the minerals sector, including copper,gold, silver and marble, and for bigticket infrastructure projects as East Timor tries to reverse years of underinvestment.
Mr Pires said Spain, China and Australia are all keen on a piece of the Timor resources pie, while East Timor expert Damien Kingsbury from Deakin University said the United States and the United Kingdom are also interested.
China and East Timor's links date back centuries. Hakka Chinese traders sailed there more than 500 years ago looking for sandalwood, rosewood and mahogany. Many stayed on, forming an overseas Chinese community as in many other parts of Asia. Today, Dili's main street is lined with buildings, some of which display Chinese script, families can be seen praying at a Confucian temple in downtown Dili, while Chinese traders run appliance stores on busy streets. Chinese labourers are already at work on one of two heavy oil power plants which are under construction after Dili in 2008 awarded the Chinese Nuclear Industry 22nd Construction Company a $360 million contract to build the power plants and a national power grid. East Timor also paid $28 million for two petroleum vessels from China.
Mr Loro Horta said China is also angling for big ticket infrastructure contracts such as a pipeline that East Timor wants built from its Greater Sunrise oil field to a proposed processing plant on land.He said Chinese oil giant PetroChina has already done studies and is keen to drill.
"In 2004, PetroChina did a seismic study and said they didn't find much.But then, two years ago, I heard that they were willing to drill but they want exclusivity rights," he said.
Yang Donghui, a spokesman for the Chinese ambassador in Dili, said that the first phase of the seismic investigation was completed as an aid project, but that a proposed second phase investigation became the subject of commercial talks between the East Timor government and PetroChina.
China's ambassador to East Timor Fu Yuancong rejected speculation that China's interest in the fledgling nation is driven by a desire to gain an advantage when East Timor is handing out contracts to develop its billion-dollar oil and gas fields."All this assistance from China to Timor Leste is full of sincerity and without any selfishness, unlike what the Western media has speculated. The Chinese government never bore any political strategy in Timor Leste," he said.
According to Mr Loro Horta,"The growing Chinese presence is part of their natural expansion into Southeast Asia and I think Timor is not really their priority. But they are definitely keeping an eye on it. The Chinese are very patient and they think very long term."
Monday, September 14, 2009
Gorgon gas project gets final green light
Chevron Corp and its partners gave a formal green light to building the Gorgon liquefied natural gas project in Australia, the world's biggest new development, at a lower than estimated cost of US$37 billion.
The final investment decision, widely expected after the project cleared a series of key regulatory hurdles last month following years of review, is the starting gun on a project that will generate huge revenues for contractors and deliver some 8% of the world's LNG when it begins production in 2014.
The decision underscores a growing appetite for gas in the Asia-Pacific region and heralds a shift in the hierarchy of Asian consumers that will see China overtake Japan as the dominant LNG buyer, a strategic position that gives China increased bargaining power as it chooses which project to back.
Gorgon will also put pressure on about a dozen other LNG projects in Australia that are competing for both willing buyers in China, India, South Korea or Japan,and for the limited manpower and materials necessary to build the huge terminals that will make Australia the world's No.2 gas exporter behind Qatar.
Chevron put a price tag of A$43 billion (US$37 billion) on the first 15 million tonne per year (tpy) phase of the project,some 14% less than costs estimated by the government several months ago, and said the partners would decide within a year whether to add two further pro-duction units on Barrow Island, from an initial three, to expand output.
"Gorgon has been a long time coming.Gorgon is destined to be an iconic project,a legacy project with massive investments set in motion today," George Kirkland,Chevron's executive vice president of global upstream and gas, said at a briefing in Perth.
Chevron reiterated that it will fund its share of the project's construction from its own balance sheet.
The go-ahead will be a relief to Chevron and partners ExxonMobil and Royal Dutch Shell, each holding a 25% stake in the project, who have endured years of delay amid environmental concerns about its location on Barrow Island, off the coast of western Australia, and rapid cost escalation.
Kirkland said the recent downturn in the oil and gas industry has reduced capital costs, working to their advantage.
It is expected to create about 10,000 jobs at its peak and will be a boost for both the country's export earnings and a potential boon for project contractors ranging from US firm KBR to South Korea's Hyundai Heavy Industries and Australia's Leighton Holdings.
Chevron has already awarded A$2 billion worth of contracts and expects to award a further $10 billion by year-end.
"Gorgon could prompt other projects to speed up to try and fix costs before the next great leap forward caused by rapid expansion and limited resources,"said Tony Regan, an LNG consultant with Tri-Zen International in Singapore.
The Gorgon gas field, discovered more than 30 years ago, is the first LNG project to be approved since December 2008 and is also Australia's largest ever resource project, set to generate A$300 billion in Australian export earnings and a government revenue of A$40 billion.
Gorgon is also a breakthrough in terms of being the world's biggest carbon sequestration project. Chevron will spend A$2 billion to bury 40% of Gorgon's greenhouse gas emissions, or 3.4 million tonnes per annum, by injecting the gas into a reservoir 2 km (1.2 miles) below Barrow Island.
The greater Gorgon area is estimated to have resources of 40 trillion cubic feet of natural gas, the equivalent of 6.7 billion barrels of oil."The resource contains enough equivalent energy to power a city of one million people for 800 years,"Chevron said.
The final investment decision, widely expected after the project cleared a series of key regulatory hurdles last month following years of review, is the starting gun on a project that will generate huge revenues for contractors and deliver some 8% of the world's LNG when it begins production in 2014.
The decision underscores a growing appetite for gas in the Asia-Pacific region and heralds a shift in the hierarchy of Asian consumers that will see China overtake Japan as the dominant LNG buyer, a strategic position that gives China increased bargaining power as it chooses which project to back.
Gorgon will also put pressure on about a dozen other LNG projects in Australia that are competing for both willing buyers in China, India, South Korea or Japan,and for the limited manpower and materials necessary to build the huge terminals that will make Australia the world's No.2 gas exporter behind Qatar.
Chevron put a price tag of A$43 billion (US$37 billion) on the first 15 million tonne per year (tpy) phase of the project,some 14% less than costs estimated by the government several months ago, and said the partners would decide within a year whether to add two further pro-duction units on Barrow Island, from an initial three, to expand output.
"Gorgon has been a long time coming.Gorgon is destined to be an iconic project,a legacy project with massive investments set in motion today," George Kirkland,Chevron's executive vice president of global upstream and gas, said at a briefing in Perth.
Chevron reiterated that it will fund its share of the project's construction from its own balance sheet.
The go-ahead will be a relief to Chevron and partners ExxonMobil and Royal Dutch Shell, each holding a 25% stake in the project, who have endured years of delay amid environmental concerns about its location on Barrow Island, off the coast of western Australia, and rapid cost escalation.
Kirkland said the recent downturn in the oil and gas industry has reduced capital costs, working to their advantage.
It is expected to create about 10,000 jobs at its peak and will be a boost for both the country's export earnings and a potential boon for project contractors ranging from US firm KBR to South Korea's Hyundai Heavy Industries and Australia's Leighton Holdings.
Chevron has already awarded A$2 billion worth of contracts and expects to award a further $10 billion by year-end.
"Gorgon could prompt other projects to speed up to try and fix costs before the next great leap forward caused by rapid expansion and limited resources,"said Tony Regan, an LNG consultant with Tri-Zen International in Singapore.
The Gorgon gas field, discovered more than 30 years ago, is the first LNG project to be approved since December 2008 and is also Australia's largest ever resource project, set to generate A$300 billion in Australian export earnings and a government revenue of A$40 billion.
Gorgon is also a breakthrough in terms of being the world's biggest carbon sequestration project. Chevron will spend A$2 billion to bury 40% of Gorgon's greenhouse gas emissions, or 3.4 million tonnes per annum, by injecting the gas into a reservoir 2 km (1.2 miles) below Barrow Island.
The greater Gorgon area is estimated to have resources of 40 trillion cubic feet of natural gas, the equivalent of 6.7 billion barrels of oil."The resource contains enough equivalent energy to power a city of one million people for 800 years,"Chevron said.
Subscribe to:
Posts (Atom)