Trade Resources Industry Views PTTEP Might Invest in North American Shale-gas and Myanmar Deep-water Projects

PTTEP Might Invest in North American Shale-gas and Myanmar Deep-water Projects

Thailand's PTT Exploration & Production PCL, the country's flagship petroleum explorer, might invest in North American shale-gas and Myanmar deep-water projects as part of its plan to nearly double its output by 2020.

PTTEP, which made headlines last year when it outbid Royal Dutch Shell PLC and spent $2.2 billion to acquire Cove Energy PLC, owner of 8.5% of a huge Mozambique natural-gas field, is looking for more overseas purchases to help meet rising energy-consumption needs at home, as there are limited domestic opportunities to increase its reserves.

"We intend to look for producing assets which can contribute production and reserves in short term and medium term," Chief Executive Tevin Vongvanich said in an interview. "The assets we are targeting should strategically fit our growth areas. It will be nice if it can contribute liquefied natural gas to Thailand."

A string of LNG export facilities are being built or planned in the U.S. and Canada as new technology unlocks vast quantities of gas previously trapped in shale rock. The first U.S. LNG exports might occur as soon as 2015.

"We have not been involved in shale before…we are starting to look into the possibility," he said, adding that the U.S. and Canada are leaders in the sector. "We hope that we will be able to participate in some of these projects to learn and understand this technology before we start investing elsewhere by ourselves."

Closer to home, China has good potential for shale developments, he said.

PTTEP is also "very interested" in bidding in Myanmar's current deep-water licensing round and has bid for onshore concessions, he said.

Total expenditure from 2013 through 2017 is likely to be 10% more than an earlier plan of $25 billion, in part because of investments needed in Mozambique, he said.

The company, which owns or has stakes in 45 projects in 12 countries, has a target to produce 100,000 barrels of oil equivalent a day by 2020 from future acquisitions, in addition to a goal of 500,000 BOE a day by that year from existing ventures, representing 8% annual growth, he said. Current output is 340,000 BOE a day, with 80% of this from domestic oil and gas fields.

Much of PTTEP's production growth will come from its stake in the Mozambique Area 1 Rovuma concession, one of the world's biggest as-yet-unexploited offshore natural-gas fields.

Mr. Vongvanich said he doesn't expect any further changes in the ownership of the gas field, after recent purchases of equity in it by Indian companies.

The equity structure of the Mozambique holding "will remain," with operator Anadarko Petroleum Corp. of the U.S. owning 26.5%, three Indian firms with a combined 30% and Mitsui & Co. of Japan holding 20%, Mr. Vongvanich said. Empresa Nacional de Hidrocarbonetos, Mozambique's national oil company, owns the remaining stake.

The partners are in talks with potential buyers of gas from the first two gas-production trains and a possible joint gasification complex to be built with Italy's ENI SpA, the operator of another big Mozambique gas venture, he said.

If the Area 1 final investment decision is taken in the second half of next year, then the first LNG production will be in 2018 or 2019, he said.

Expected LNG exports from the U.S. and Canada's rich shale-gas deposits wouldn't affect the viability of the Mozambique project, he said, as prices in Asia for that gas would probably be between $12 and $16 a million British thermal units, roughly the same price range likely for Mozambique's LNG.

Mr. Vongvanich said oil output from his company's investments in Algeria, Australia and Canada is likely to increase strongly over the next few years.

PTTEP's 100%-owned offshore Montara oil field in northern Australia delivered its first oil to Thailand in August. It is now producing 10,000 barrels of crude oil a day, and this is expected to rise to 30,000 barrels a day in the first quarter of 2014, he said. Montara was the site of Australia's worst oil spill, after a rig caught fire in 2009 and 20,000 barrels of oil leaked into the Timor Sea.

In Algeria, PTTEP, working with PetroVietnam, expects to start producing 20,000 barrels of crude a day in late 2014. Prospects are good for a second PTTEP Algerian venture, with China's Cnooc Ltd. and national oil company Sonatrach, as eight out of nine wells drilled at their Hassi Bir Rekaiz project have struck oil.

In Canada, PTTEP has a 40% stake in an oil-sands project led by Norway's Statoil ASA. Mr. Vongvanich said the project's current output of 20,000 barrels a day might rise to 80,000 barrels by 2018.

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