Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Oil and gas thailand 2011 v f

619 views

Published on

Published in: Business, News & Politics
  • Be the first to comment

Oil and gas thailand 2011 v f

  1. 1. Oil & Gas Thailand 2011 อนาคตประเทศไทยอนาคตประเทศไทย อุตสาหกรรมนํ้ามันและแก๊สอุตสาหกรรมนํ้ามันและแก๊ส 8th September 2011 ByBy Pongpun Amornvivat Corporate Commercial Planning Manager Thai Oil Public Company Limited Thai Oil Public Company Limited p y
  2. 2. Today’s Agenda Oil & Gas Thailand 2011 อนาคตประเทศไทยอนาคตประเทศไทย ้้อุตสาหกรรมนํ้ามันและแก๊สอุตสาหกรรมนํ้ามันและแก๊ส Global Oil MarketGlobal Oil Market Thailand’s Oil MarketThailand’s Oil Market Changing Landscape & Changing Landscape &  Challenges for Thai RefineriesChallenges for Thai RefineriesChallenges for Thai Refineries Challenges for Thai Refineries  How to Stay in the GameHow to Stay in the Game 2 How to Stay in the GameHow to Stay in the Game
  3. 3. Today’s Agenda Oil & Gas Thailand 2011 อนาคตประเทศไทยอนาคตประเทศไทย ้้อุตสาหกรรมนํ้ามันและแก๊สอุตสาหกรรมนํ้ามันและแก๊ส Global Oil MarketGlobal Oil Market Thailand’s Oil MarketThailand’s Oil Market Changing Landscape & Changing Landscape &  Challenges for Thai RefineriesChallenges for Thai RefineriesChallenges for Thai Refineries Challenges for Thai Refineries  How to Stay in the GameHow to Stay in the Game 3 How to Stay in the GameHow to Stay in the Game
  4. 4. Oil Story – The Chronology of Black Gold Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion $/BBL Oil Prices and Major Events 150 $/BBL Brent WTI Oil Prices and Major Events $147 Fears over EU debt 2nd Bailout for Greece 110 130 Lehman Brothers showed $3.9bn loss China imports petroleum products for Olympics Japan Earthquake US Debt ceiling dispute 90 $96 AIG received $85bn from US government Dubai Debt Crisis Greece debt woes, Credit rating cut Severe winter $84 $108 End of Gaddafi 70 GM, Ford & Chrysler asked for 25bln emergency Loan M t US t Russia vs Ukraine Gas Dispute BP Oil Spill MENA Tension $84 IEA release 60 mbbl from SPR S&P cut US rating 30 50 $34 emergency Loan US spending in Jan09 rebounded by 0.6% Most US corporate earning s in Q2’09 beat market expectation Fears over EU debt from SPR Q1’11 BR: $106 WTI :$95 Q2’11 BR:   $117 WTI : $102  US rating Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 4
  5. 5. Overview of Global Oil Market Oil Market Driver Global Oil Market Thailand Price Structure Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Oil Market Driver NYMEX (WTI) Thailand EconomicWorld  Macroeconomic ICE Domestic Demand Fundamental (Brent) Tax/Fund Marketing  Margins Non ‐ Fundamental Platts (Dubai) Platts (Gasoline and Diesel) Thailand Retail Price (Gasoline and Diesel)(Dubai) (Gasoline and Diesel) 5
  6. 6. Growing Global Economy Global Economy continues to grow in 2012‐2016 Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion 12% GDP Growth (%YoY) ….. 5 0% % % 4 7% 4 7%6% 9% China India 2.9% 0 5% 5.0% 4.4% 4.5% 4.5% 4.6% 4.7% 4.7% 3% 6% Japan Thailand-0.5% -3% 0% Thailand US -6% EU World -9% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: IMF World Economic Outlook 11 Apr 11, June Revision 6
  7. 7. Global Oil Demand Outlook Global Oil Demand Outlook 2010/2011/2012 Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Thousands barrels per day Europe 465 13 North America 295 179 79 FSU ‐109 ‐143 ‐49 Asia285 232 275 Middle East 465 ‐225 13 1449 927 921 232 Africa 55 33 125 302 196 243 Latin America Source: IEA, Oil Market Report, August 2011 IEA Demand  (mbd) Growth (mbd) 2011 89 49 +1 20 EIA Demand  (mbd) Growth (mbd) 2011 88 19 +1 37 OPEC Demand  (mbd) Growth (mbd) 2011 88 14 +1 21 , p , g 2011 89.49 +1.20 2012 91.09 +1.61 2011 88.19 +1.37 2012 89.83 +1.64 2011 88.14 +1.21 2012 89.44 +1.30 Source: OPEC, Oil Market Report August 11Source: IEA, Oil Market Report August 11 Source: EIA, Short Term Energy Outlook August 11 7
  8. 8. Looking Beyond: Expected Slower Growth Global oil demand continues to grow but at a declining rate, with high  h i i i d h i d l d ld Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion growth rate in emerging countries and stagnant growth in developed world  Middle distillate products continue to outperform, supported by industrial demand  Gasoline market remains under pressure on rising supply and sluggish demand due to higher fuel  ffi i & t ti f l t i hi lefficiency & penetration of electric vehicles  MBD Global Oil Demand GrowthGlobal Oil Demand Growth 11..55 22..88 11 22 11..66 11 33 11 22 11 11 11 11 2 0 3.0 4.0 MBD Others S.America 11..22 11..33 11..22 11..11 11..11 0.0 1.0 2.0 ME China --00..66 --11..00 -3 0 -2.0 -1.0 OECD Total -3.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 SOURCE: IEA Medium Term Report [Jun‐11] / IEA Oil Monthly Report [Aug‐11] 8
  9. 9. Rising call on OPEC crude  OPEC to fill up the gap to meet rising demand in the next 5 years Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion 100 MBD p g p g y OPEC to raise production to match actual supply to balance the market Demand Growth Rate (MBD) 80 90 Call on  OPEC Crude 2016 Call on  OPEC Crude ++66..33 2011-2016 DemandDemand 60 70 0 6 33.2 MBD OPEC Crude 2011 30.6 MBD +1 5+1 5 ++22..66 NGLNGL OPECOPEC 50 60 +1.5+1.5 ++22..22 NGLNGL NonNon‐‐OPECOPEC 40 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2010 2011 2012 2013 2014 2015 2016 OPEC Crude OPEC NGLs Non‐OPEC Supply 2010 2011 2012 2013 2014 2015 2016 Total Demand SOURCE: IEA, Oil Market Report July 11 9
  10. 10. Tight OPEC Spare Capacity Tight OPEC capacity due to a loss in Libyan supply Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Tight OPEC capacity due to a loss in Libyan supply OPEC spare capacity tightened from peak of 5 MBD to just 3.5 MBD due to production loss  from Libya by 1.6 MBD, affected by the uprising.  33 35 Million BBL 31 33 Total OPEC Production Capacity 1.0 5.1 3.5 27 29 Total OPEC Production Capacity Total OPEC supply 25 27 7 8 9 0 1 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Source: OPEC Oil Market Report August 11 10
  11. 11. Funds Flow Fueling Oil Prices Volatility Funds Flow Driving Oil Prices Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Oil becomes an investment asset class and hedge tool against US dollar weakness … PRICE 11
  12. 12. Investment Flows Investment flow dipped from record high Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion 150350 000 $/bblPositions  (1,000bbl/position) Number of Contract WTI Prices Non‐commercial players aggressively sold‐off oil contract futures on fears of global economic slowdown 130 150 300,000 350,000 90 110 200 000 250,000 70 90 150,000 200,000 50100,000 3050,000 Jan‐08 Apr‐08 Jul‐08 Oct‐08 Jan‐09 Apr‐09 Jul‐09 Oct‐09 Jan‐10 Apr‐10 Jul‐10 Oct‐10 Jan‐11 Apr‐11 Jul‐11 Source: US CFCT 12
  13. 13. Other Factors Other Factors to Impact Oil Prices Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion DisastersDisastersGeopolitical Risk & Fears  of Supply Disruption Geopolitical Risk & Fears  of Supply Disruption Regulations & PoliciesRegulations & Policies Volcanic eruption/  Earthquake/  Flu pandemicMENA Unrest Libya, Yemen and Syria  Central Banks QE3?, Interest rates  policy, RRR Weather/SeasonalWeather/Seasonal Ni i Di t Taxes & Subsidies on  ‘Green’ energy projects Flood / Hurricane Nigeria Dispute Fade‐out Nuclear  Power Plant Summer/ WinterIran nuclear sanction 13
  14. 14. Crude Oil Price Outlook What the Others Say Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Brent prices to be softer from the current level in H2‐11 due to  “Debt Problem & Sluggish growth” Oil Price Forecast BRENT Unit : USD/BBL Q3-11 Q4-11 2011 2012 2013 BofAML 110.0 102.0 108.6 114.0 - Barclays 110.0 115.0 112.0 115.3 - BNP Paribas 113.0 116.0 114.0 124.0 - Citigroup 107.0 95.0 106.0 86.3 - Credit Suisse 110.0 100.0 108.4 100.5 - First Energy 110.0 115.1 111.8 113.8 115.0 Global Risk 110.0 107.0 108.5 112.3 - Goldman Sachs 114.0 119.5 113.5 130.0 - JBC Energy 110.4 104.5 109.3 105.9 106.9 JPM 112 0 115 0JPMorgan - - 112.0 115.0 - Morgan Stanley - - 120.0 130.0 - Soc Gen 114.2 113.3 112.6 115.2 119.0 UBS 105 0 95 0 105 7 95 0 95 0 14Source : Reuters Polls (31 companies) as of 26 August 11 UBS 105.0 95.0 105.7 95.0 95.0 Average from Reuters 109.7 105.1 109.5 107.9 110.4
  15. 15. Crude Oil Price Outlook What We See?? Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion What We See?? We expects Brent to be average $111 in 2011 due to strong demand from  Asia and the Middles East, limited supply from Libya and more fund flows $117 $110 $112 $110 120120 $/BBL$/BBL $106 $99 $80 90 100 110 90 100 110 $66 $73 $63 $80 60 70 80 60 70 80 2011 Brent $111 40 50 60 40 50 60 2006 2007 2008 2009 2010 1Q11 2Q11 3Q11 4Q11 20122006 2007 2008 2009 2010 1Q11 2Q11 3Q11 4Q11 2012 Latest Forecast Actual 15
  16. 16. Conclusion of Global Oil Market Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion  Oil demand growing steadily but at slower pace Oil demand growing steadily but at slower pace OIL MARKETOIL MARKET g g y p  Non‐OPEC crude oil supply growing less than demand  OPEC still playing a key role in controlling the market g g y p  Non‐OPEC crude oil supply growing less than demand  OPEC still playing a key role in controlling the market PRICE FORECASTPRICE FORECAST  Short‐term: Expect Brent to trade in $95‐$115 range  Medium to long term: Expect persistently high oil  i t t i l di it l d b ti ht d il it  Short‐term: Expect Brent to trade in $95‐$115 range  Medium to long term: Expect persistently high oil  i t t i l di it l d b ti ht d il it PRICE FORECASTPRICE FORECAST prices at triple digits, led by tight crude oil capacity  Oil prices to be volatile, led by market sentiment and  macroeconomic conditions prices at triple digits, led by tight crude oil capacity  Oil prices to be volatile, led by market sentiment and  macroeconomic conditions 16
  17. 17. Today’s Agenda Oil & Gas Thailand 2011 อนาคตประเทศไทยอนาคตประเทศไทย ้้อุตสาหกรรมนํ้ามันและแก๊สอุตสาหกรรมนํ้ามันและแก๊ส Global Oil MarketGlobal Oil Market Thailand’s Oil MarketThailand’s Oil Market Changing Landscape & Changing Landscape &  Challenges for Thai RefineriesChallenges for Thai RefineriesChallenges for Thai Refineries Challenges for Thai Refineries  How to Stay in the GameHow to Stay in the Game 17 How to Stay in the GameHow to Stay in the Game
  18. 18. Thailand Energy Dependency At A Glance Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion • Sign of improvement in energy consumption efficiencySign of improvement in energy consumption efficiency • However, in 1H 2011, figure has bounced back to 1.3, implying that Thailand  still relied  significantly on energy in driving the economyg y gy g y Source : Ministry of Energy, NESDB & TOP PLC 18
  19. 19. Among the energy consumed, Oil & Gas accounts for  70% of total energy consumption  Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion • Thai economy is addicted to Oil & Gas with 70% of total energy consumptionThai economy is addicted to Oil & Gas with 70% of total energy consumption  • Natural gas is showing significant growth Source: Energy Policy and Planning Office (EPPO) / TOP PLC 19
  20. 20. Quick View of Thailand NG & Oil supply & demand Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion 20
  21. 21. Thailand Petroleum Product Balance Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion • Before 1997 financial crisis, Thai petroleum demand grew robustly at  12.1% p.a. & Thailand was f f , p g y p net importing nation at that time.  • However, since 1997, Thai petroleum demand growth has been very low at 0.5% p.a. on average • More local supply was added on stream with new refineries changing Thailand to be a net export  nation Source :  Ministry of Energy, NESDB, TOP PLC 21
  22. 22. Local petroleum demand growth Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Petroleum Demand Growth  Key Factors affecting petro demand  S rging & olatile cr de oil price Surging & volatile crude oil price  Government policy on Biofuel & Petro retail pricesPetro retail prices  Political Stability & tourists’ confidenceconfidence  Fragile global economy after 2008 economic crisiseconomic crisis 22Source : Ministry of Energy & TOP PLC
  23. 23. Thailand Petroleum Product Demand Outlook 2030 Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion • Oil demand in the next 20 years is relatively low compared to historical figures owing toOil demand in the next 20 years is relatively low compared to historical figures owing to  the 3 main factors which are the rise in oil price trend, more alternative/renewable energy  and increased efficiency.  Thailand Petroleum Products Demand Outlook (Average Annual Growth Rate : AAGR) ff y ( g ) Source : TOP PLC Estimate 23
  24. 24. Preview 15‐Year Thailand Renewable Development Plan   Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion 24
  25. 25. Aggressive Target on “Less Oil Dependency Policy”  Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion • Based on actual figure 2011 7M, ethanol + Biodiesel + NGV have already replacedBased on actual figure 2011 7M, ethanol + Biodiesel + NGV have already replaced  mogas & gasoil around 16% or 11 mml/day  Source : Department of Alternative Energy Development and Efficiency, Ministry of Energy and Thaioil PLC estimate (2011) 25
  26. 26. In addition to government’s effort to promote alternative energy  (biofuel & NGV), capped local LPG price also encourages surge in LPG  demand in transportation sectordemand in transportation sector   Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Accumulated LPG vehicle LPG V hi lLPG in Transportation Sector (‘000 unit) LPG Vehicles 400 600 800 649 LPG in Transportation Sector  As local LPG price is capped far below international price, it causes market distortion & encourage switching d d t d LPG f t t ti 0 200 2006        2007          2008         2009          2010 demand toward LPG for transportation usage  As of Jul-2011, LPG usage in transportation sector reach 5.23 mml/day or 7% of total mogas & gasoil demand LPG usage in transportation as of  / LPG Station Jul‐11, it’s at 5.23 mml/day  Source : DOEB, Ministry of Energy 26
  27. 27. Energy Policy : A Big Impact Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Example of Recent Changes in Oil Fuel Fund /Excise Tax Policies  • During December 2010 to April 2011, government used oil fuel fund to cap diesel  retail price at below 30 Baht/Litre • Then from April 2011 onward, excise tax removal has been used instead to maintain diesel  price below 30 Baht/Litre • On August 27 2011 government slashed oil fuel fund collection on ULG91/95 & Diesel causingOn August 27, 2011, government slashed oil fuel fund collection on ULG91/95 & Diesel causing    retail price lower by 3 – 8 Baht/Litre overnight • Later on August 31, 2011, government reduced oil fund collection on Gasohol 91,95 & E20 to  maintain the attractiveness of Gasohol over normal Gasoline  27
  28. 28. Base on Regression Study, Recent Drop in Gasoline/Diesel Retail Prices due to  temporary oil fuel fund removal would have positive effect on local petro demand  Gasoline/Gasohol From regression analysis, every 1%  drop in gasoline price will cause Retail price of U91/95 edged down  by 6‐8 B/Litre or by 17%  Gasoline/Gasohol drop in gasoline price will cause  gasoline demand to rise by 0.3% Thus, U91/95 demand are  potentially to rise by 5%.  Diesel From regression analysis, every  1% drop in diesel price will cause  Diesel Retail price of diesel reduced by  3B/Litre or by 10%   p p diesel demand to rise by 0.4% Thus, diesel demand is expected to  rise by 4%.  Source: Energy Policy and Planning Office (EPPO) , TOP PCL 28
  29. 29. Conclusion on Thailand Oil Market  Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion  Thai Economy is addicted to Enegry in driving  economic expansion  Thailand ill remain net petro e porting nations Thailand will remain net petro exporting nations  as demand growth is relatively low  Thailand will be “Asian Alternative Energy Hub” 29
  30. 30. Conclusion on Thailand Oil Market  Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion  Thai Economy relies heavily on energy consumption in driving Econ Growth  ( fl t d i E I t it f 1 3 d i 1H 2011)(as reflected in Energy Intensity of 1.3 during 1H‐2011)  Among energy consumed, Oil & Gas accounts for 70%. BUT in term of growth rate  natural gas enjoys growth of almost 10% p a during the past 20 years while oilnatural gas enjoys growth of almost 10% p.a. during the past 20 years, while oil  has growth of merely 2% p.a.  Surging crude oil prices together with aggressive government’s push for Surging crude oil prices, together with aggressive government s push for  alternative fuel, has caused local petro demand being low & volatile and Thailand  has been net petro exporting nations since 1997 (with currently export around  230 KBD of petro product)230 KBD of petro product)  As of 1H‐2011, ethanol + biodiesel + NGV has already replaced Mogas & Diesel of  around  11 mml/day or 16% and if incorporating LPG, the replacement will rise to / y p g , p 16 mml/day or 22%   Certainly, other government policies such as changing oil fuel fund / excise tax,  promotion of mass transit system would inevitably have impact on local petro  demand in the long run 30
  31. 31. Today’s Agenda Oil & Gas Thailand 2011 อนาคตประเทศไทยอนาคตประเทศไทย ้้อุตสาหกรรมนํ้ามันและแก๊สอุตสาหกรรมนํ้ามันและแก๊ส Global Oil MarketGlobal Oil Market Thailand’s Oil MarketThailand’s Oil Market Changing Landscape & Changing Landscape &  Challenges for Thai RefineriesChallenges for Thai RefineriesChallenges for Thai Refineries Challenges for Thai Refineries  How to Stay in the GameHow to Stay in the Game 31 How to Stay in the GameHow to Stay in the Game
  32. 32. New wave of refining capacity addition Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion As new supply is lagging growing demand, cracking margin will be healthy  Product demand growth in ME & AP will outpace additional capacity during 2010‐2014  The wave of new ME refineries starting from 2015 will put pressure on refining business KBD ME Additional Demand Refinery Addition Refinery Addition vsvs Demand Growth in AP & MEDemand Growth in AP & ME 2,000 2,500 3,000 ME Additional Demand AP Additional Demand Taiwan ME Breathing Period 3.2 MBD 3 9 MBD3 9 MBD 6.3 MBD6.3 MBD 500 1,000 1,500 Vietnam AP Others Japan India 3.9 MBD3.9 MBD -1,000 -500 0 China ME CDU Capacity Addition AP CDU Capacity Addition 1,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 SOURCE: FACTS Global Energy, Asia‐Pacific Databook, Spring 2011 (April 2011) 32
  33. 33. New players with high complexity Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion New refineries come with full cracking facilities 60% VDU/CDU Asian Pacific's Refinery  Existing refineries with low cracking ratio will be less and less competitive Japan India China 50% 60% Asian Pacific s Refinery Thailand Indonesia Singapore 30% 40% Pakistan Phili i Malaysia South Korea Taiwan Australia 10% 20% Philippine Vietnam ‐10% 0% 0 10 20 30 40 50 60 CRACKING/CDU SOURCE: Thai Oil, FACTS Asia Pacific Databook, Spring 2010 33
  34. 34. Pressured Refining Margin Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Weakening refining margin on capacity surplus 10.00 USD/BBL Singapore Gross Refining MarginSingapore Gross Refining Margin 6.00 8.00 2 00 4.00 0.00 2.00 -4.00 -2.00 Cracking Margin Simple Margin *Including internal fuel and loss  2004 2005 2006 2007 2008 2009 2010 34
  35. 35. Higher fuel efficient vehicles in the future % penetration on new vehicles, 2020 Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Europe KoreaGlobal market North America El t i 100% =  ~ 90 mn cars 100% =  ~21 mn cars 100%= ~ 20 mn cars 100%= ~ 1 mn cars Electric vehicle  (EV) Hybrid 24 16 9 1 25 26 3 1 24 20 16 3 25 410 1 Internal Combustion 83 72 73 77 95 Combustion Engines  (ICE) 67 72 73 60 65 A : Government incentive battery cost ~200 USD/ kwh oil ~110 USD/ bblA : Government incentive battery cost ~200 USD/ kwh oil ~110 USD/ bbl A B A B A B A B A : Government incentive, battery cost  200 USD/ kwh, oil  110 USD/ bbl B : No incentives, battery cost ~200 USD/ kwh, oil ~60 USD/ bbl A : Government incentive, battery cost  200 USD/ kwh, oil  110 USD/ bbl B : No incentives, battery cost ~200 USD/ kwh, oil ~60 USD/ bbl SOURCE: McKinsey 35
  36. 36. Alternatives cutting demand for fossil Biofuel demand grew over 6 times in the past 10 years Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Biofuel demand grew over 6 times in the past 10 years  Share of biofuel usage continues to grow consistently on the back of strong government support  Global biofuel consumption will contribute 2.4% in 2016, most of which replaces gasoline usage Growing share of Growing share of biofuelsbiofuels 4% 5% 90 100 % of BiofuelTotal Oil Supply (MBD) 2% 3% 70 80 0% 1% 50 60 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 SOURCE: IEA Medium Term Report [Jun‐11] / IEA Oil Monthly Report [Aug‐11] 36
  37. 37. Overview of Thailand’s Refineries Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion  There are 7 refineries in Thailand with total refining capacity of 1,092 KBD and majority of  production is on middle distillates (Jet & Gasoil) which match with country demand patternproduction is on middle distillates (Jet & Gasoil), which match with country demand pattern SOURCE: PTIT Focus Special Annual Report 2004, except for capacity figure for RRC (Based on RRC Offering Memorandum) 37
  38. 38. AEC : Expanding Boundary ASEAN  Countries 2003 Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Countries Indonesia Malaysia Philippines Singapore : ASC : ASEAN Political‐Security Community  : AEC : ASEAN E i C it 1992 AFTA g p Thailand Brunei Vietnam Myanmar Laos ASEAN Economic Community : ASCC : ASEAN Social‐Cultural Community AFTA ASEAN Free Trade Area Laos Cambodia Promote and protect  investment under National  Treatment What is AEC? Free Flow  Free Flow of  Free Flow of  Investment Fast track  services include  ICT, Healthcare, Tourism, Air  Transportation Engineer Lifting restrictions  for capital mobility Free Flow  of Goods of Services ee o o Capital Free Flow of  Skill d L b Eliminate  Tariff Transportation g Architect Accountant Doctor Nurse Dentist of Goods Skilled LaborTariff  Construction 38
  39. 39. AEC & Logistic Link as “the Opportunity” Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion North-South East-West Southern 39
  40. 40. Conclusion of Future Challenges Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion  Demand growth in Asia Pacific and Middle East to  outpace refining capacity addition from now till 2014  Demand growth in Asia Pacific and Middle East to  outpace refining capacity addition from now till 2014 REGIONAL MARKETREGIONAL MARKET  New wave of new capacity from ME during 2015‐2018  to again pressure the industry  The challenge of green trend  New wave of new capacity from ME during 2015‐2018  to again pressure the industry  The challenge of green trendThe challenge of green trendThe challenge of green trend Domestic refining capacity is 1.1 MBD while demand  remains below 0.8 MBD ll f f ddl d ll d Domestic refining capacity is 1.1 MBD while demand  remains below 0.8 MBD ll f f ddl d ll d LOCAL MARKETLOCAL MARKET  All refineries focus on middle distillate production to  serve local demand  AEC to open doors for ASEAN communities in 2015  All refineries focus on middle distillate production to  serve local demand  AEC to open doors for ASEAN communities in 2015p fp f 40
  41. 41. Today’s Agenda Oil & Gas Thailand 2011 อนาคตประเทศไทยอนาคตประเทศไทย ้้อุตสาหกรรมนํ้ามันและแก๊สอุตสาหกรรมนํ้ามันและแก๊ส Global Oil MarketGlobal Oil Market Thailand’s Oil MarketThailand’s Oil Market Changing Landscape & Changing Landscape &  Challenges for Thai RefineriesChallenges for Thai RefineriesChallenges for Thai Refineries Challenges for Thai Refineries  How to Stay in the GameHow to Stay in the Game 41 How to Stay in the GameHow to Stay in the Game
  42. 42. 50 Years – A Long Road of Success Development & Revenue Growth AGM Award + Board  of the Year  + Best CG + TQC Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion + Best CG + TQC  2010 Upgrading + Expansion + Diversification + Oil Price 42
  43. 43. TOP Group Business Structure 100% 100% 55% 100% PTT 26%J‐Power 19% 100% 30% Thaioil  (TOP) Thai Lube Base (TLB) Thaioil Power  (TP) Thaioil Marine (TM) P d Thaioil Ethanol (TET) Thai  Paraxylene (TPX) 100% 30% Maesod Clean Energy (MCE) Capacity :  275,000 barrels/day Small Power Producer  Program 3‐on‐1 Combined Cycle Sells Electricity/ Steam to Group  Oil&Chemical Tankers Capacity :153,000  DWT Sugarcane Based Ethanol Capacity : 200,000 lts/day Padaeng 35% Mitr Phol 35%Lube Base Oil  Capacity : Base Oil  270,000 tons/annum Bitumen Aromatics Capacity: Paraxylene  489,000 tons/annum Mixed Xylene 90,000 tons/annum Sapthip(SAP)50% Thaioil Marine  International Pte Ltd. 100% 50%NYK Bulk &  Platformate 1.8 million tons/annum 3 on 1 Combined Cycle Electricity 118 MW Steam 168 tons/hour PTT 20% 56%  400,000 tons/annum TDAE 65,000 tons/annum Benzene  177,000 tons/annum Toluene  144,000 tons/annum Total  900 000 / Sapthip(SAP) Cassava Based Ethanol Capacity : 200,000 lts/day 50% Ubon Bio Ethanol (UBE)21% Cassava Based Ethanol C i 400 000 l /d TOP‐NYK MarineOne  Pte Ltd. (TOP‐NYK) 50% Energy B.V. 50% Crude Tankers :VLCC Capacity :281,000  DWT BCP 21%Others 58% Independent Power  (Thailand) (IPT) Thaioil Energy Services (TES) Proceeds the business on  various professional of  management services PTT 20% Thaioil 24% 100% Thappline  (THAP) 9% PTT 31% Others  60%900,000 tons/annum    Thaioil Solvent Through TOP Solvent (TS) 100% 1st Independent Power Capacity : 400,000 lts/day g Multi‐product Pipeline Capacity:26,000 m.lts/y Through TOP Solvent (TS) Capacity  : 1st Independent Power  Producer Program 2‐on‐1 Gas‐Fired, Combined Cycle Electricity 700 MW 100%80.52% Solvent distribute  in Thailand Sak Chaisidhi  (SAKC) Top Solvent  Vietnam Solvent distribute  i i PTT ICT Solutions (PTT ICT) PTT Energy Solutions (PTTES) Provides engineering  techniqueconsulting 20% PTT 40% PTTAR 20% IRPC 20% 1 PTT Group 80% 20%100,000 tons/annum in Vietnam ( ) technique consulting   services 43
  44. 44. Efficiency OperationalOperational ExcellenceExcellence FlexibilityReliability 44
  45. 45. More Efficiency – Reducing Energy Loss Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion 120 125 CEL Index (Lower = better) 110 115 105 110 95 100 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1H-2011 “Energy and Loss play a vital role in margin especially when oil price is high” 45
  46. 46. More Efficiency – Squeezed Asset Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Gasoil Gasoil 108 % Gasoil Gasoil 360oC 362oC 106 % Fuel oil Fuel oil PX IntakePX Intake “Consistently squeeze the capability of existing asset” 46
  47. 47. Efficiency OperationalOperational ExcellenceExcellence FlexibilityReliability 47
  48. 48. High Flexibility – Refine New Crude Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Driven by high discount to typical crude Evaluate key severe properties (e.g. TANs, Sulfur) Identify methodologies for each crude typeIdentify methodologies for each crude type Implement unconventional crude processing 8 12 USD/BBL Arab Light‐Heavy Differential 4 8 “Moving towards more severe  crude is the key to survive” 0 Jan‐00 Jan‐02 Jan‐04 Jan‐06 Jan‐08 Jan‐10 crude is the key to survive 48
  49. 49. High Flexibility – Refine New Crude Sources of Crude Products Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion 9% 4% 2% 13% 14% 14% 3% 3% Far East Local LPG Platformate Gasoline Others 12% 19% 19% 16% 16% Gasoline Jet 87% 72% Middle East Diesel 37% 38% FO 11% 11% Q1/10 Q1/10 Q2/10 Q2/10Q2/10Q1/10 “Diversified crude sources while maintaining product yield” 49
  50. 50. High Flexibility – Capture Niche Market Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Distillate  Aromatic Extract Treated Distillate  Aromatic Extract Purified (DAE) (TDAE) What does the market need ? Cleaner products ? Higher quality ?Higher quality ? Specification changes ? Market Driver 50
  51. 51. Efficiency OperationalOperational ExcellenceExcellence FlexibilityReliability 51
  52. 52. Improved Reliability – Less Outages Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Risk IdentificationFailure diagnosis/DEM Unconventional crude processing Equipment life assessment Inspection/ maintenance strategy Furnace energy improvementMechanical seal improvement 52
  53. 53. Efficiency OperationalOperational ExcellenceExcellence FlexibilityReliability 53
  54. 54. Align Strategies by Operation Excellence Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Update  MarketMarket  Condition Monthly Identify  Margin Gap Monthly Quarterly Checking Seek  Improvement Set Target “Align commercial strategies and refinery operations”  54
  55. 55. Bottom‐up Engagement Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion Looking Forward – KFALooking Forward  KFA Value Chain Integration Enterprise Risk Management Innovation Integration Reliability Management  System Growth People ManagementSustainable Development Cost Management Work Process Improvement Productivity  and Efficiency “C ti l i th th h 5 Y K F A S h ” Customer Focus “Continuously improve the process through 5‐Year Key Focus Area Scheme” 55
  56. 56. TOP Group’s Core Enablement  Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion HPO CSR CG Engineering Clean Energyg g gy Sustaining Green World 56
  57. 57. Ambitious Strategy Evolution Refinery Flagship Asia Pacific’s Leader Global Oil Market  Thailand Oil Market  Changing Landscape Stay in the Game Conclusion e e y ags p s a a s eade “Top quartile  profitability” Return Scale “Top quartile  profitability” Return Complex Scale  Complex Commodities SpecialtiesCommodities Specialties Operational Excellence Business Excellence 57
  58. 58. Thank You pongpun@thaioilgroup.com Thai Oil Public Company Limited Thai Oil Public Company Limited

×