PTT to exit gas pipeline business

National oil and gas conglomerate PTT Plc expects to start unloading its gas pipeline business this year.

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Chief operating officer Sarun Rungkasiri said PTT was ready to spin off the business in response to a call by the National Energy Policy Council, which last week agreed with the energy flagship's new board, chaired by Piyasvasti Amranand, that the pipeline business should no longer be part of the PTT empire.

Mr Sarun said PTT would separate out the balance sheets and accounts of the gas pipeline business by year-end, then set up a new company to run it by mid-2015.

As the founder, PTT would have to own 100% of the new company. It later hopes to invite the Finance Ministry to hold the majority stake instead.

The idea of spinning off the gas pipeline business is an initiative of the new PTT board appointed by the military regime and aimed at improving transparency at the request of activists. Mr Sarun said the new pipeline company would be a non-listed firm and majority-owned by the state.

PTT's gas pipeline network spans more than 3,715 kilometres including 2,240 km offshore, with total assets worth 120 billion baht.

The length of pipeline excludes the 39-billion-baht, 300-km fourth section now under construction. That segment runs from Rayong to Saraburi and is scheduled to enter operation by mid-2015.

To reduce the energy dominance of PTT, the military regime plans to open up the business to third parties and let new players compete with PTT as gas sellers and service providers. The new arrangement could include outside management of liquefied natural gas (LNG) terminals now owned and operated by PTT.

The junta also wants to restructure PTT's refinery business for the sake of greater competition in the sector.

PTT is a major shareholder in five of six oil refiners in the country, owning 49% of Thai Oil, 49% of PTT Global Chemical, 36% of Star Petroleum Co (SPRC), 27.2% of Bangchak Petroleum Plc and 38.5% of IRPC.

Last week it was granted approval by the National Energy Policy Council to spin off its SPRC shares through an initial public offering, anticipating a SPRC listing on the SET in mid-2015.

Viraphol Jirapraditkul, a member of the Energy Regulatory Commission, said the rules for allowing third-party access to the gas pipeline business and LNG terminals were being drafted under a third-party access (TPA) regime with input from public hearings.

He said the TPA's final draft should be finished this month.

In related news, GDF Suez's sale of a stake in its Australian power unit has drawn interest from PTT and Singapore's Keppel Infrastructure, according to people with knowledge of the matter.

PTT president Pailin Chuchottaworn was unavailable for comment yesterday.

France's GDF is seeking A$400 million (11.9 billion baht) from the sale of a 30% stake in the Australian unit, said two people asking not to be identified.

PTT shares closed yesterday on the SET at 334 baht, unchanged, in trade worth 501 million baht.

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