Sunday, July 6, 2008

Thailand's PTT reveals $125-billon investment

Aims for top-100 global status by 2012

YUTHANA PRAIWAN

PTT Plc has outlined an investment programme worth US$125.6 billion from now to 2020 as it moves to strengthen its competitiveness among the world's major oil and gas players.

Around 61% of the total would be invested in overseas projects and the remainder in domestic ventures, said Prasert Bunsumpun, the chief executive officer and president of the majority state-owned oil and gas company.

Breaking down the budget by business unit, around $76 billion would go to upstream projects such as exploration and production, and $20 billion to natural gas and related businesses.

Also, the company will commit $10 billion to its petrochemical businesses, $10 billion to oil refineries, $3.6 billion to power generation, $2.4 billion to ethanol, $1.6 billion apiece to crude palm oil and coal businesses, and $400,000 to its retail oil businesses.

Mr Prasert said the investment plan was aimed at sustaining its existing businesses over the long term, with the amounts based on the potential of each business as well as the group's financial capability.

Investing abroad has been PTT's main focus since 1995, when subsidiary PTT Exploration and Production Plc (PTTEP) began to secure petroleum supplies outside of Thailand. PTTEP's first foreign venture was in Burma, followed by Indonesia and Oman. Today it has 38 projects in 14 countries.

PTT has also joined with Thailand's largest industrial conglomerate, Siam Cement Group, to develop a petrochemical complex in Iran. It also has oil-trading representative offices in China, Indochina and Singapore.

In conjunction with the investment plan, PTT is reviewing its management and human resources requirements. It has concluded that it will need a total of 410 people in senior executive or expert positions in various fields. Of that figure, 140 positions should be filled internally by experts who will be working at PTT over the next 12 years.

Mr Prasert said the company had 260 executives and experts, of whom 100 were scheduled to retire by 2012. As a result, it will need to fill more positions through recruitment and outsourcing. ''We may need 120 in the E&P field, 60 in business development and strategy, 30 in trading, 20 in power generation, 20 in petrochemicals and oil refining.''

PTT, the only Thai company in the Fortune Global 500, aims to move into the top 100 in terms of assets in the annual survey by the US business magazine by 2012. By then, the company projects $94 billion in revenue with annual average growth of 15%, rising to $176 billion in 2020 with average growth of 8% a year. PTT was 207th in 2007 with $47 billion in revenue.

The PTT Group is Thailand's largest business with revenue last year of 1.5 trillion baht and a net profit of nearly 100 billion baht. In the first half of this year, it reported a profit of 26.1 billion baht on revenue of 505.7 billion.

''We don't know when the cyclical downturn will come. If our plan is right, we should remain strong even at that time,'' Mr Prasert said ''Our most challenging task is not just to be a top global company but also admired, such as Johnson & Johnson or British Gas.''

To achieve the latter goal, Mr Prasert said the company would keep developing its social contribution programmes, research and development, and promote corporate governance.

PTT shares closed on Friday on the SET at 298 baht, unchanged, in trade worth 572 million baht.

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