Published on November 14, 2007
PTT Exploration and Production (PTTEP) will delay its exploration project in Iran for at least six months.
The move comes on the back of a three-fold increase in operating costs since sanctions were imposed on that country.
PTTEP president Maroot Mrigadat yesterday said the decision would delay parent company PTT's plan to import liquefied natural gas (LNG) from Iran, forcing it to import LNG from other sources that demand higher prices.
"As the natural-gas supply from the Gulf of Thailand will be tighter in 2010, imports will become necessary," Maroot said. "PTTEP will try to supply the agreed volume to PTT. Though the Arthit Field suffers from some delays, it will be able to supply gas in February 2008, and the production output in 2010 should be as planned."
The US along with the other UN Security Council veto-wielding powers - China, France, the UK and Russia - have already imposed two sets of sanctions on Iran.
PTTEP wholly owns an exploration-venture contract for the Saveh Field, 200 kilometres south of Tehran. Exploration on the 13,500-square-kilometre area was originally expected to take off late this year. Originally, the natural gas from the field was to be exported back to Thailand under a long-term sales contract with PTT. Due to the delay, PTT will need to shift its orders to other countries, such as Qatar and Oman. However, the spot price of LNG is about US$10 (Bt338) per million British thermal units. This would raise the power price at home. because most of the gas is geared for power generation.
Maroot is also optimistic that PTTEP's exploration of offshore gas in Burma's M9 Block, which would require about $1 billion in investment over the next five years, will go as planned. The company this year began exploring in the Gulf of Martaban jointly with Burma's top state-run oil company, Myanmar Oil and Gas Enterprise.
PTTEP spokesman Sitthichai Jayant said the company planned to drill more exploration wells this year and start installing production equipment next year. He did not cite any possible delays in Burma, even though the country is under a series of US and European economic sanctions imposed over the junta's human-rights abuses and its recent crackdown on pro-democracy protests.
The investment in Burma is not included in the company's five-year investment Bt281-billion budget.
Maroot yesterday told reporters that due to the baht's appreciation, this year's investment in baht terms dropped 10 per cent from the target to Bt66 billion from Bt74.5 billion. On average, the baht equalled 35 the US dollar, compared with 38 to the dollar last year.
Maroot also announced the investment budget for the next five years would be slashed Bt4 billion to Bt281 billion, due to the stronger baht and cost-cutting measures.
In the first nine months of the year, PTTEP posted a net profit of Bt20.975 billion, down slightly from Bt21.93 billion in the same period last year. In the third quarter, the net profit was Bt7 billion, up from Bt6.8 billion in the same period last year.
"We're responsible for petroleum exploration and production," Maroot said. "But PTTEP is ready to help all parties campaign to save energy. Thailand's energy-consumption cost is 1.4 times higher than gross domestic product growth. The 1:1 ratio in developed countries indicates their much higher energy efficiency."