"Globally, we have surplus capacity in both LNG and crude oil," said Tevin Vongvanich, PTT President and CEO in an interview on the sidelines of the World Economic Forum on ASEAN in Phnom Penh last Friday.
"We don't see a drastic change in the LNG price for the next two or three years on the spot market because of this oversupply situation," he said, adding that a "buyers' market" will persist.
Despite the global supply overhang, Tevin said he was more confident in the demand profile for LNG in the home market of Thailand where he expects demand to double over the next five years.
"Apart from growth in the natural gas demand, we also have the potential depletion in the domestic resource in Thailand as well as the expiring of the contracts for buying gas from Myanmar," Tevin said. "So we will rely more and more on imported LNG. That's why PTT is investing in LNG importing terminals."
Strengthening import demand for LNG from the domestic Thai market will also drive the development of new projects in areas such as East Africa, where PTT's upstream division recently acquired an interest in a "huge gas find" — Mozambique's Rovuma Offshore Area 1.
"It's a matter of turning that resource into the market and converting that resource to reserves," Tevin said, adding that he expected Thailand to be "the anchor market" for development of the resources in Mozambique.
Like its competitors across the upstream sector, PTT has been cutting the costs of production.
"The upstream group can now survive at $30 per barrel on price. That is something that we intend to keep that level," Tevin said, adding that digitization has played a key role across the product slate in improving efficiencies and keeping costs down.
"We have adopted digitization, the internet of things, linking the sensors to predict the performance and the failure of the equipment so that we can do the maintenance before and just in time, so that has been the major part in reducing our unit costs," Tevin explained. "Overall, we have been able to reduce our costs maybe by about 20 percent at the minimum — 20 percent to 30 percent depending on the operations last year."