FocusThailand to extend strong LPG imports on PTT gas project delay

17 December 2009 04:49  [Source: ICIS news]

By Nurluqman Suratman

SINGAPORE (ICIS news)--Thailand will have to continue importing strong volumes of liquefied petroleum gas (LPG) next year amid rising demand, as the start-up of a major gas project in Mab Ta Phut faces delay, industry analysts said on Thursday.

The country's LPG imports were projected to grow 43% in 2010 to 1m tonnes, “to catch up with demand”, said Suttichai Kumworachai, a Bangkok-based analyst with brokerage KGI Securities.

Imports accounted for about 28% of Thailand’s estimated LPG consumption of 2.4-2.5m tonnes this year, said Naphat Chantaraserekul, a Bangkok–based analyst at Kim Eng Institutional Research.

LPG has grown in popularity among motorists in Thailand as it is a cheaper alternative to diesel.

Thailand was initially banking on the 6th separation gas plant of petrochemical major PTT that was supposed to come on stream in January next year to satisfy growing demand for LPG.

The plant, however, was among the 65 projects at Mab Ta Phut in Rayong province that have remained under court suspension on grounds that they are environmentally harmful.

PTT just received a notification from the Department of Industrial Works to halt construction on about 18 projects covered by the court injunction, the company said in a disclosure to The Thailand Stock Exchange on Wednesday.

The delay in the gas plant would also affect the operations of PTT’s 1m tonne/year ethane cracker although this unit was not among those subject to the court injunction, said Kim Eng’s Naphat.

The cracker, slated to start operations in January, was supposed to get half of its required ethane feedstock from the 6th gas separation plant once it came on stream, he said.

Thailand
would have to deal with major LPG shortage in 2010 as a direct consequence of the delay in PTT’s gas project, Energy Minister Wannarat Channukul was quoted by the Bangkok Post as saying early this week.

"We had estimated that if the project began in May or June 2010, then imports would not be necessary as the plant's production capacity of over 100,000 tonnes per month is sufficient to meet the country's demand," Wannarat had said.

It was not yet clear when the injunction will be lifted so that the affected chemical projects in Thailand’s petrochemical hub of Mab Ta Phut can proceed. Analysts said it could take up to six months before the gas plant could go on stream.

The resulting tightness in LPG supply could push up prices significantly, analysts said.

Thailand currently sells LPG at a subsidised rate of $330/tonne (€228/tonne), about half the international price of $650/tonne, said Naphat of Kim Eng Securities.

“Prices will definitely increase because we have to import LPG given that the local supply does not support current demand, he added.

($1 = €0.69)

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By: Nurluqman Suratman



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