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Thai Petrochemical Companies Turn to Imports as Reserves Dwindle

PTA_Facilities02deThailand’s petrochemical companies are turning to imports in the last quarter of this year, a measure caused in part by the ingreasing gap between supply and demand in the energetic sector. Most of the imports of petroleum crude oil and raw natural gas (the so-called downstream sector) were from neighbouring Myanmar, although companies as well as the Government in Bangkok are taking active steps to fill in the gap right here at home.

According to official numbers, domestic gas consumption hit a record high in the first quarter, in March, rising by 9.6%. This was not met accordingly at home: despite production growth in the same month, overall output fell 6,9% in the first quarter. The energy sector, which accounts for more than 65% of all gas used in Thailand, recorded the highest demand.  To counter the difference, domestic petrochemical companies, led by the petrochemical division of state-owned energy corporation PTT, announced plans to import, as a security measure against a possible fall in local gas supplies.

“We have to consider several options, including using raw material from our refinery, importing more feedstock and shale gas,”  PTT Global Chemical CEO Supattanapong Punmeechaow told Reuters earlier in the year.

Specialists say the switch in the companies’ policy is caused by both rising domestic consumption and dwindling hydrocarbon reserves. Mr. Supattanapong said that reserves of natural gas in the Gulf of Thailand might be depleted in the next seven to eight years. PTT Global Chemical is considering another approach to secure access to raw materials and be closer to major world markets: developing a petrochemicals plant in the United States in partnership with Japan’s Marubeni Corporation.

But there are some good news on the market, too. Crude oil prices have dropped more than 50% from the peak of 2008.

The recent global drop in oil prices has had a positive net effect on the downstream petrochemicals sector, as 60-70% of the cost of production is related to the price of crude oil,” said Atikom Terbsiri, the CEO and president of refiner, distributor and petrochemicals producer Thai Oil. The Thai Government has taken a proactive approach and is also looking for solutions to ease the strain against home production. Bangkok hs promised a new round of bid for gas and oil exploration concessions.

But the future belongs to renewable energy. Thai policymakers expect a total investment in renewable energy of 100 to 200 billion baht ($2.97-5.97 billion) in 2015, mainly due to an increase in capacity of solar farms and solar rooftop projects.

Thailand uses natural gas for 65 percent of its power generation but wants to reduce its dependence to 40 percent over the next two decades and focus more on clean coal technology and renewable power.

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