PTT shoulders Bt230bn liquidity burden to secure Thailand’s oil supply

PTT Plc has been closely monitoring the unrest in the Middle East for more than a month as the crisis continues to affect global energy shipping routes.

To manage Thailand’s energy security proactively, the company said it had moved quickly by adjusting its crude oil procurement plans and sourcing supplies from outside the conflict zone, despite the higher costs involved.

At the same time, it has continued distributing oil to consumers in order to prevent shortages in the domestic market and maintain the country’s energy security.

With tensions in the Middle East disrupting key energy shipping routes, particularly the Strait of Hormuz, PTT said it had stepped up crude oil management measures to deal with the risk of transport disruption.

It said 2 million barrels of crude oil procured from the Middle East had already been loaded on to the tanker Serifos, which had been stranded near Sharjah Ports since March 7.

Following temporary ceasefire talks between the United States and Iran on April 10, the tanker was finally able to depart after a delay of about one month. It is expected to arrive in Thailand on April 21.

To ensure Thailand did not face an energy security risk, PTT decided to source replacement crude from other suppliers immediately. It said it had relied on its international trading capabilities and global partner network to ensure the country continued to have access to energy supplies, even though purchases had to be made at a time when prices had risen sharply.

PTT said the decision to procure crude oil during the crisis came at a time when the global market was tight and demand had risen, pushing crude prices as high as US$130 per barrel. This meant purchases had to be made at above-normal prices, resulting in higher costs and exposing the company to potential short-term losses once global oil prices later eased.

The estimated financial impact is around 500 million to 1 billion baht, which PTT described as the cost of insuring the country’s energy security. In addition, the rapid rise in global oil prices has significantly increased the PTT Group’s liquidity burden and financing costs.

These include:

• around 63 billion baht in margin calls for crude oil purchases
• an increase of about 137 billion baht in working capital for additional oil and gas procurement
• around 35 billion baht in outstanding payments from the Oil Fuel Fund linked to price compensation

Taken together, these items have pushed the group’s additional liquidity burden to more than 230 billion baht, resulting in more than 7 billion baht in extra interest costs.

PTT stressed that these costs were not part of its normal business operations and had not been passed on to consumers through retail oil prices. Instead, they were incurred as part of efforts to reduce national risk and ensure that Thailand would not face an oil shortage.