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.