PTT seeks govt help in funding overseas drive

PTT Group of Companies is seeking the government's assistance in its overseas expansion, which is proceeding at full speed and requiring the group to consider corporate downsizing. Pailin Chuchottaworn, president and chief executive officer of PTT, yesterday said the government should consider setting up a sovereign wealth fund for co-investment in gas projects owned by Cove Energy.

As is the practice in many countries, the government could use the fund to invest in exploration projects and then hand over the operations to PTT under concessions.

Paillin said this would guarantee long-term energy security for Thai-land, as PTT alone is unable financially to provide the amount required for such exploration.

Its subsidiary PTT Exploration and Production last week announced the completion of a US$1.9-billion (Bt60 billion) takeover of Cove Energy, which owns a stake in the Rovuma gas field in Mozambique.

Because of the extra borrowing required, PTTEP which contributed 60 per cent of PTT's earnings last year, could see a credit-rating downgrade.

This year, the group announced a plan to invest Bt900 billion through 2016.

Surong Bulakul, chief financial officer of PTT, said the group this month and next would raise funds through debentures and term loans worth $1 billion in total to help finance the Cove Energy takeover and restructure its debt.

PTTEP in June raised $500 million from a 30-year global bond, as well as Bt5 billion from a hybrid security in the Thai market.

Surong said subsidiaries, including PTT Global Chemical, also plan to seek additional sources of funds in the second half of the year.

Owned 51.11 per cent by the Finance Ministry, PTT Group is the country's largest listed company with assets of Bt1.5 trillion and market capitalisation of nearly Bt1 trillion.

Huge expansion in the past resulted in group comprising more than 200 companies, but some have ceased business while others operate in overlapping businesses.

Pailin said the 33-year-old entity is downsizing to cut off unnecessary investment and ensure greater business flexibility.

Destined for liquidation are those units that have ceased business or show losses or redundancy deriving from the amalgamation of subsidiaries. Some small units could also be merged, while there would be consideration over whether others should continue their businesses.

The PTT chief said this should enhance the group's competitiveness in light of further trade liberalisation and allow it to cope with global economic impacts.

Surong added that of the 200-plus companies, about 30 were set up for overseas investment in Malaysia, China and the Philippines about 20 years ago. Some of these companies have ceased business, while others are still operating.

KeloilPTT in Malaysia is one such company. Established as a 40-per-cent-owned subsidiary of PTT, the company was intended to distribute liquefied petroleum gas in the north of Malaysia. However, shortly after its establishment, Thailand had to import LPG for domestic consumption and had no excess supply for export purposes. It remains under consideration whether PTT would pull out the investment or come up with other measures, Surong said.

PTT has a number of business units in China, with one of them, PetroAsia, operating in several cities.

This is on top of the Chinese units of PTT Global Chemical, which operate in similar businesses.

PTT Global Chemical was formed after the amalgamation of PTT Chemical and PTT Aromatics and Refining.