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Thai oil giants hunt for investments

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Bloomberg are reporting that the Thai energy companies sitting on the largest hoard of cash outside China are ready to put it to use.

Thailand’s PTT Exploration & Production Pcl and its parent company have nearly US$11 billion combined in cash and marketable securities. The explorer is ready to spend from its portion on projects and exploration acreage to rescue declining oil and gas reserves.

PTT E&P is eyeing early-life producing assets or projects that are already sanctioned and ready for development. It is also looking to work with its parent, PTT Pcl, to invest in LNG plants, which would help feed the country’s growing demand.

LNG is an important avenue for growth. Parent-company PTT is looking to expand gas imports to meet growing domestic demand fuelled by economic expansion, while domestic production is declining and pipeline imports from Myanmar may be redirected to China.

PTT last week announced a higher-than-expected 2016 dividend of 16 baht (46 US cents) per share, signalling an increased focus on capital allocation. The company’s balance sheet can sustain 20% higher dividends in the medium term.

PTT on Monday closed up 1.5% at 402 baht in Bangkok, the highest in almost a month, while PTT E&P ended the day unchanged. The country’s benchmark SET Index gained 0.2%.

The company has said that geography does not play as much of a limiting role for LNG projects. They would prefer a project where the export facilities and production fields are combined, as opposed to projects such as those on the US Gulf Coast, where companies buy already produced gas and then pay to have it liquefied for export.

PTT E&P owns an 8.5% stake in Anadarko Petroleum Corp.’s proposed Mozambique LNG project. The companies are finalising legal requirements with the government, firming up gas contracts with buyers and beginning to discuss financing for the project.

The company also has exploration acreage 700 km offshore Australia that could contain 4 trillion ft3 of natural gas. The company has shifted its focus from developing a floating production platform for the project to working with existing onshore liquefaction plants.

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