PTT studies Vietnamese market
could lead to major gas distribution deal
Bangkok Post, 27 May, 2004
Yuthana Praiwan
PTT Plc is ready to make major investments in Vietnam , but first it needs assurances regarding the potential of the country's natural gas sector and that its government welcomes foreign investment.
Chitrapongse Kwangsukstith, PTT's senior executive vice-president for natural gas, said the company was keen on developing gas separation, petrochemical and power plants in Vietnam .
PTT and the Vietnam Oil and Gas Corporation (Petrovietnam) signed a deal to conduct a feasibility study on the demand for gas by factories at 12 industrial estates in Ho Chi Minh City . If the study shows commercial viability, construction of a gas distribution network will be carried out.
The study will be undertaken in two parts. The first will involve demand for gas at six industrial estates this year, followed by a survey of the other six industrial estates to be carried out in 2005.
If the factories show a readiness to use gas instead of bunker oil and diesel at a volume sufficient for investment, PTT and Petrovietnam would form a joint venture to handle gas retailing.
The return on investment from the project would be between 12% and 15%, said Mr. Chitrapongse.
If it gets the green light from the government, the gas retailing project would mark PTT's first venture in Vietnam .
Hanoi is generally opposed to foreign investment in utilities such as gas distribution, preferring instead to handle all investment itself.
One exception is petroleum drilling and production which requires huge investment.
However, Mr. Chitrapongse said PTT saw future opportunities for investing in petrochemical and power plant projects if Hanoi adopts a more welcoming stance by revising its laws limiting foreign ownership.
If foreigners continue to be allowed only marginal investments in Vietnam , PTT would look elsewhere, he said. Demand for gas in Vietnam is about one billion cubic feet per day, of which more than 90% is used as fuel for electricity production.
Such consumption levels offer good opportunities for PTT to invest and expand its markets, he said.
Petrovietnam has been producing gas from its White Tiger field as fuel for electricity production since 1995.
Other major fields include Lan Tayi and Lan Do in the south!. PTT is interested in a co-venture with Hanoi to install a pipeline between 300 and 400 km long connecting a gas field in the Gulf of Thailand 's Block B with one southwest of Vietnam .
If Hanoi considers its indigenous gas supply in excess of local demand, PTT would be ready to connect Vietnam 's gas pipeline with Thailand 's main supply.
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