Oct 1, 2012

PTT signs agreement to set up retail oil venture in Myanmar

PTT Plc, the national energy conglomerate, is moving forward with plans to establish a retail oil business in Myanmar by working with a local partner.

The move serves PTT's goal to become a regional oil retailer within five years, said Auttapol Rerkpiboon, executive vice-president for communication and international market.

PTT Oil Myanmar Co will be registered to operate businesses in the neighbouring country, pending approval from the company's board of directors. This will be in time for Myanmar to open its retail oil sector to foreign investors.

The Myanmar subsidiary is expected to have registered capital of 500,000 kyat, in line with the regulation of the Myanmar Investment Committee. The business will include oil retailing and wholesaling, depot and logistic operations.

At present, PTT has only a lube oil business through a local distributor in Myanmar and cross-border petrol trade from Thailand. PTT Exploration and Production Plc (PTTEP), Thailand's sole explorer, is already a major investor in the country's upstream petroleum sector.

"Myanmar has very strong potential in the oil retailing business. Demand is expected to grow sharply after the country opens to foreign investors and tourists," said Mr Auttapol.

Currently, oil consumption per head in the neighbouring country is very low at 38 litres annually, compared to 140 litres in Cambodia and Thailand's 700 litres. Each year, Myanmar consumes 2.4 billion litres of oil compares with 44 billion litres in Thailand.

PTT earlier this month signed a memorandum of understanding with Myanmar partner Denko Trading Co to study business opportunities there.

Demco, the local conglomerate, operates 15 petrol stations in Yangon with a land bank of about 60 rai which is expected to be developed into an oil depot.

Mr Auttapol said the feasibility study will take around six months to complete. The group expects to use the PTT brand for developing business in Myanmar.

PTT will aggressively expand its lube oil business in Myanmar with an aim to become the second largest player there. Currently, it ranks third with a 15% market share after Thailand's Trane (30%) and UAE-based Falcon (18%).

The group has already established a presence in Laos and Cambodia with a plan to invest 800 million baht in oil retailing business in the two countries. Petrol stations in Cambodia will be increased to 45 locations from the present 14 and double to 60 stations in Laos through PTT Cambodia Co and PTT Laos Co, respectively.

The company also plans to expand the oil retail and logistics network in the Philippines from the current 45 units but the exact target unit has not yet been finalised, according to Mr Auttapol.

Shares of PTT closed on the SET Friday at 329 baht, unchanged, in trade worth 910.7 million baht.

Source: Bangkok Post