Insuring energy security

Mission and Vision

On December 29, 1993, the Petroleum Authority of Thailand (PTT) will celebrate the 15th anniversary of its operational achievements, not only as the national oil company but also the enterprise that can successfully compete with other multi-national firms in the petroleum business.

The main objective of PTT is to serve as an efficient government working arm in implementing national energy policy for the country's best interests. PTT's fully integrated petroleum activities consist of exploration, production, logistics, transportation, refining, distribution, storage and other petroleum-related industries.

Exploration and Production

Exploration and production activities are undertaken by PTT's wholly-owned subsidiary, PTT Exploration and Production Public Co.,Ltd., which has been involved in many joint ventures e.g. a 25% interest in S1 project with Thai Shell Explora-tion and Production Co.,Ltd. in which crude oil had been found at the Sirikit field. It is the source for an average oil output of 22,655 barrels per day (b/d), natural gas output of 42.6 million cubic feet per day (MMCFD) and LPG output of 247 tons per day.

Refining

PTT is a major shareholder in two refining companies: Thai Oil Co.,Ltd. and Bangchak Petroleum Public Co.,Ltd. which ensure consistent supplies. In order to fulfill the growing demand for oil products, the government in 1990 granted permission to establish two more refineries i.e. Rayong Refinery Co.,Ltd. (145,000 b/d capacity) and Star Petroleum Refining Co.,Ltd. (130,000 b/d refining capacity). PTT is holding a 36% interest in each. The new refineries are to start operations in 1995 and 1996 respectively.

Marketing

Through more than 1,000 gas stations nationwide, PTT's petroleum products are extensively available to the public. The existence of PTT's products in the oil market has become a State mechanism to ensure fair and reasonable prices after the oil price deregulation system came into effect in 1991. Moreover, PTT can boast of its environmentally friendly products to solve or diminish air pollution problems resulting from fuel combustion. PTT's spearheading ventures such as the introduction of low-leaded gasoline, low-sulphur diesel, lower-smoke 2T lubricant and many other products have inspired other companies to follow suit.

On the international front, PTT has entered into the petroleum market in neighboring countries, especially those of the Indochinese region. PTT's joint operating contract with Norway's national oil firm, STATOIL, is a bold step PTT has taken in its expansion into the overseas market. The establishment of PTT's representative office in Singapore in 1989 is the first ground-breaking venture of a Thai petroleum company in the international petroleum trade.

Natural Gas Development

At the end of 1981, natural gas was first produced from Erawan gas field of Unocal Thailand Ltd., at the capacity of 130 MMCFD, marking the new era of energy resources in Thailand. Indigenous petroleum products at present account for 30% of commercial consumption nationwide, 80% of which is natural gas, the rest crude oil and condensate.

During the initial stages of gas production, the natural gas produced was delivered, via pipeline, to power plants and cement plants for use as fuel in substitution for fuel oil. As natural gas discovered in Thailand is composed of various valuable hydrocarbon components which can be separated for use as feedstock in the petrochemical industry, efforts have been made by the government to optimize its value. Towards this end, the first Gas Separation Plant was constructed in 1984. Due to high demand for LPG, the second Gas Plant (capacity of 250 MMCFD), was constructed in 1991.

PTT also takes responsiblity in investing in the construction of offshore and onshore pipelines covering 807 kms. to transmit natural gas from the fields in the Gulf of Thailand. One of the pipeline projects under-taken by PTT is the construction of pipeline from the Bangkok field in the Gulf of Thailand to the Erawan field and from the Erawan field to Khanom district in Nakhon Si Thammarat province. Another gas pipeline will be constructed from the Erawan field to the gas plants in Rayong and South Bangkok power plant in Samut Prakan parallel to the existing one, to ensure the security of the gas transmission system.

Transportation

With the attempt to alleviate traffic congestion in Bangkok, a major policy in this respect is to transport oil via pipeline instead of trucks and trains. PTT has been designated as the core agency in establishing Thai Petroleum Pipeline Co.,Ltd. (PTT has a 30.6% interest), to construct an oil pipeline from refineries in Chon Buri province to Saraburi province. The pipeline is expected to start operation by the end of 1993.

Petrochemical Industry

In order to maximize the benefits from natural gas utilzation, the National Petrochemical Complex Phase I (NPC I) has been developed. Ethane and propane separated from natural gas separation plants are supplied to the olefins plant of the National Petrochemical Corporation Ltd., in which PTT holds a 49% interest.

Investment Plan

The investment plan worth over US$ 3 billion in the next five years consists of various petroleum related projects such as the development of PTT's oil storages and gas stations nationwide, the construction of natural gas transmission from both indigenous and neighboring countries' sources.

One of the major investment projects is the establishment of the Research and Development Center, worth US$ 40 million, which will be the first national petroleum research and development center of the country.

Conclusion

The annual turnover of more than US$ 3 billion and the profit, before tax, of around US$ 280 million in 1992 are not the prime objectives of PTT operation. Above all, PTT believes in maintaining its role as the national oil firm, which not only responds to the original goals as stipulated in the law, but also develops Thailand's strength to face up to any challenges in the years to come.

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