National oil and gas conglomerate PTT is considering cutting operation costs and revamping the process for refined oil production in response to the sharp drop in oil prices and the pandemic.
PTT president and chief executive Chansin Treenuchagron said oil and gas demand has dropped drastically during the outbreak, with many countries restricting land and air transport.
PTT subsidiary executives met to discuss the crisis and revise capital expenditures, with the intention to submit an action plan to PTT within a month.
The plan is traditionally revised every six months, but the group will make an earlier revision in light of the rapidly changing situation.
Mr Chansin said the first step is cutting unnecessary expenses while retaining staff and avoiding pay cuts.
The group was projected to invest 900 billion baht over 2020-24, but may cut some projects from its capital expenditure plan.
PTT plans to go forward with Thai Oil's Clean Fuel Project for a total cost of US$4.73 billion, planned for 2019-22.
The 8-billion-baht Ultra Clean Fuel Project was developed by IRPC.
PTT Global Chemical's $985-million Map Ta Phut retrofit project to build an olefins plant and expand operations at Map Ta Phut Industrial Estate in Rayong province will also continue as scheduled.
PTT also plans to repurpose jet fuel in stock towards diesel thanks to the massive decline in demand for jet fuel globally.
Jet fuel represents 12-15% of total refined oil output, with diesel at 35-40% and gasoline at 15-20%. The remainder is in bunker oil, bitumen and cooking gas.
Mr Chansin said demand for oil has dropped by 20-25 million barrels per day (BPD) globally from 100 million BPD, a figure expected to decrease even further.
He expressed hopes that major oil producers like the US, Russia and Saudi Arabia will begin talks about cutting production to raise prices. Oil prices initially collapsed when Saudi Arabia significantly hiked production to punish Russia for not agreeing to cut production.
"Oil prices at this level [$20-30 per barrel] have made some producers shut down because production costs exceed oil prices, so these players will have to negotiate more favourable terms if they want to continue," Mr Chansin said.
He expects the pandemic may continue until the end of the second quarter and oil prices may come back up to $35-45 per barrel.
Positive signs have emerged in China following the end of the two-month lockdown in Wuhan and the industrial sector returning to normal operations.
PTT is producing 80,000 litres of alcohol for sanitiser per day to deliver to the public next week after Energy Minister Sontirat Sontijirawong called on PTT and Electricity Generating Authority of Thailand to accelerate production.
He ordered the two firms to deliver alcohol to at-risk groups such as medical workers and volunteers around the country.
Mr Sontirat said the two firms agreed to allocate 120 million baht for additional production after the regulations preventing them from turning ethanol into sanitising alcohol were removed.
