Jun 5, 2012

PTT establishing Myanmar outlets

Company says time is right to enter market

PTT Plc, Thailand's biggest oil and gas conglomerate, plans to open petrol service stations in Myanmar next year, saying the time is right to enter the newly opening neighbour before competition from other major brands intensifies.

PTT will set up a company in Myanmar within a year for the retail network to be developed next year, said Nuttachat Charuchinda, chief operating officer of downstream petroleum business.

State-owned Myanmar Petroleum Products Enterprise (MPPE) has already been privatised, selling most of its more than 400 service stations to local operators and keeping 12 for its own.

"No major brands have yet been established in Myanmar. This is a good chance for PTT to set up there," said Mr Nuttachat.
The group is currently wrapping up an investment plan for Myanmar in terms of the number of stations to be opened in the next few years.

So far, PTT has focused only on the lubricant oil business in the impoverished neighbouring country. The group's upstream petroleum subsidiary, PTT Exploration and Production Plc (PTTEP), has been active in Myanmar for nearly 20 years.

In addition to Thailand, PTT operates petrol service stations in Laos and Cambodia, with 20-30 sites each, and some in the Philippines.

"We have looked at Myanmar as a high-potential market, with oil consumption per capita still very low," said Mr Nuttachat.

"Consumption per head there is 30 times lower than in Thailand, representing huge room for us to grow the business there."

Demand for liquefied petroleum gas (LPG) in Myanmar is as low as 10,000 tonnes a year, compared with a couple of hundred thousand consumed in Thailand each month.

Meanwhile, Myanmar's civilian government has kickstarted reform and sped up law enforcement to attract foreign investment, partly through tax exemption.

"Even though some risks remain, we have to leverage those risks and be a pioneer when the market there has not fully opened," said Mr Nuttachat.

For the next stage, PTT has laid out a plan to invest in an oil refinery and petrochemical plant in Myanmar. Potential sites will need a port for logistics reasons.

At present, Myanmar has small, ageing oil refineries with a combined capacity of 100,000 barrels per day.

In addition to Dawei on the eastern coast of Myanmar, where Italian-Thai Development (ITD) has been granted a concession to develop a special economic zone, there are other potential sites for PTT to invest in refinery and petrochemical operations.

Source: Bangkok Post