The newly appointed chief executive of national oil and gas firm PTT, Auttapol Rerkpiboon, says the oil price war between Russia and Saudi Arabia that flared in April will not resume after the feud briefly caused prices to fall below zero.
Major oil producers and traders who were dragged into the conflict, which severely pressured futures prices based on the West Texas Intermediate (WTI) benchmark, already learned the lesson that no one benefited from the collapse, Mr Auttapol said.
Oil prices tumbled when Saudi Arabia significantly hiked production to punish Russia for not agreeing to production cuts. The tug-of-war occurred as the widening coronavirus pandemic caused global oil demand to plummet.
“Prices in the second half this year should stand at $40 a barrel on average after Opec producers and allies agreed to cut production to relieve the crisis,” Mr Auttapol said.
PTT is dealing with the pandemic by revising its business outlook for this year, he said.
The revision, which covers PTT and its subsidiaries, will be finished in two months, Mr Auttapol said.
A primary goal is to match the public’s preferences as people’s interest in clean energy is expected to increase after the pandemic.
The company plans to focus on gas, which is cleaner than oil, and diversify its gas businesses by offering more environmentally friendly energy solutions.
Financially, PTT wants to improve its oil refining facilities to operate at a lower cost, Mr Auttapol said.
In the petrochemical sector, the company will move towards specialty polymers because they have a higher value than commodity-grade polymers.
Internationally, PTT will expand further into fuel retail in overseas markets.
Mr Auttapol said PTT is planning to maintain cash on hand of 64 billion baht this year by issuing debentures worth 44 billion baht and bills of exchange worth 20 billion baht.
In 2018, PTT shareholders approved 150 billion baht for investment projects. But the company needs to use the money to remain liquid during the pandemic.
Over the last two months, PTT and its subsidiaries have cut their planned capital spending of 250 billion baht for this year by 10-15%, Mr Auttapol said.
The capital budget of PTT alone was revised to 54 billion baht, a reduction of 15 billion baht.
Read More: PTT boss: Russia and Saudi Arabia will end oil feud
