PTT faces cashflow squeeze;
Thai court upholds projects freeze

By Nurluqman Suratman

SINGAPORE (ICIS news)--Thai oil and gas giant PTT is facing a cut in cash flow from its downstream operations as hopes that a new batch of petrochemical projects in Mab Ta Phut will get court clearance to proceed were again dashed, analysts said on Tuesday.

The delay of PTT’s sixth gas separation plant – initially planned to start up at the beginning of this year – would potentially cut the company’s earnings as the production of liquefied petroleum gas (LPG) and feedstock for downstream units are cut, said Lertchai Kochareonrattanakul of Fitch Ratings.

“PTT’s cash flow might be reduced to 75% at least if their projects are suspended for nine months,” Kochareonrattanakul said.

The Supreme Court of Thailand had thumbed down last week 30 petitions from a number of operators, including PTT, seeking the lifting of the construction ban on their major projects, according to media reports.

The petitions were filed after the court granted exemptions in early December on 11 out of the original 76 projects ordered halted in September 2009 on environmental grounds.

“It did not come as a surprise that the court rejected the petitions as they have not obtained the permits required to restart the projects from the government, said Naphat Chantaraserekul, an analyst with Kim Eng Institutional Research, a research wing of brokerage house Kim Eng Securities.

The impasse on Mab Ta Phut projects could take seven to nine months to be resolved that affected operators would have to take hits on earnings this year, analysts said.

PTT, which has 18 projects in the banned list, would likely shave its profits in 2010 by 10%, they said.

Thai conglomerate Siam Cement Group also has 18 projects affected by the court injunction.

Delays in creating an independent body to assess the individual environmental impact of these projects also hamper processing, said Kochareonrattanakul of Fitch Ratings.

Meanwhile, the Thai government has also yet to form a committee that would address the Mab Ta Phut issues. 

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