The military takeover in Thailand is prompting a new push by the country’s oil companies to press for business in Myanmar, an industry analyst said.
The state-owned Thai Oil Plc disclosed it is bidding for a contract to renovate and operate the Thanlyin refinery near Yangon and make other investments, and PTT Global Chemical has announced plans to expand into neighboring countries.
“You are seeing a spurt in activity by the Thai oil and gas industry, which is overwhelmingly in the hands of government agencies, with the takeover of Thailand by the military following the coup,” Bangkok-based energy analyst-consultant Collin Reynolds told The Irrawaddy this week.
“Senior Army personnel have been appointed to the board of PTT which is the parent company of the likes of Thai Oil. Thailand’s economy has suffered from the political instability leading up to the coup [in May] and the military is clearly attempting to revive it through state-owned business influence.”
Myanmar has been forced to increase expensive imports of fuels such as petrol and diesel because the country’s three small refineries are in urgent need of repair and modernization.
The refineries have a theoretical production capacity of no more than 55,000 barrels per day (bpd) but are believed to be delivering only one-third of this because of old equipment. Demand in Myanmar for diesel and petrol has risen above 70,000 bpd, said industry sources.
Thai Oil produces 275,000 bpd at its refinery near Bangkok. It has teamed up with PTT, which owns a 49 percent share, to bid for the Thanlyin contract from Myanmar Petrochemical Enterprise (MPE).
“Through a partnership with MPE, a long-term plan is for developing refining and petrochemical capacity to serve Myanmar’s growing domestic consumption,” the Bangkok Post quoted Thai Oil chief executive Veerasak Kositpaisal saying.
“[Myanmar] is our target country for expanding our investments abroad. The company has worked well with officials there, and they are waiting for us to submit future investment plans,” Veerasak said without giving any details.
A decision on refinery renovation contracts by MPE is expected by the end of this year.
Meanwhile, another PTT subsidiary, PTT Global Chemical, has announced plans to expand as the start of the Asean ‘single market’ era draws near.
PTT Global, which is 49 percent owned by PTT, is Thailand’s biggest refiner as operator of a 280,000 bpd plant near Bangkok. It also produces olefins and polymers and other petrochemical products used in plastics.
PTT Global announced last week it was seeking to raise US$3 billion to fund ventures in Southeast Asia, although initially this will be in Indonesia where it plans a refinery-petrochemical project.
PTT’s overseas oil and gas arm, PTT Exploration and Production (PTTEP), which earlier this month began pumping gas from its offshore Zawtika field in Myanmar’s Gulf of Martaban, recently described Myanmar as its second home.
“The growing interest by Thailand’s energy and petrochemicals industries in expanding abroad, especially into a new market like Myanmar, is two pronged. First and foremost it’s about energy security; Thailand needs to secure more supplies of natural gas for its domestic market. Second, it sees opportunities in a greenfield business market such as Myanmar.
“Overseas expansion plans by PTT and its subsidiaries have been stifled for a year or more because of the political uncertainty at home which caused a lot of business dithering especially in state-controlled industries. The coup has changed that atmosphere completely.”
PTTEP was already operating in Myanmar long before the coup in Thailand but it has also recently taken on a more gung-ho business attitude to its neighbor.
In addition to the Zawtika field— which is Thailand’s biggest single gas production enterprise among operations in nine countries—PTTEP is the majority stakeholder in five other exploration and production projects in offshore and onshore locations in Myanmar.
Its offshore M3 and M11 exploration blocks, also in the Gulf of Martaban, cover a sea area of 11,700 square kilometers and hold prospects for more gas and some oil.
PTT, which is listed on the Bangkok stock exchange but is majority owned by Thailand’s Ministry of Finance, is still eyeing the possibility of developing a roadside fuel oils retailing chain in Myanmar, said industry sources speaking on condition of anonymity.
Source: THE IRRAWADDY