Shell stalls over CNG promotion

Shell Company of Thailand says it is reluctant to join a state programme to promote compressed natural gas (CNG), citing supply concerns. Chairman Tiraphot Vajrabhaya said the company would not commit to marketing CNG, promoted locally as natural gas for vehicles (NGV), as requested by PTT Plc and state agencies.
''The indigenous NGV supply is expected to dry up within five years despite the fact that local gas reserves from the Gulf of Thailand will last for 30 years according to an Energy Ministry forecast,'' Mr Tiraphot said yesterday.
He said that 80-90% of all natural gas developed locally would be utilised for manufacturing and power generation. Only a small portion would be supplied for the transport sector. So Thailand would need to import NGV at some point if it wants to promote the alternative fuel.
''What multinational oil companies, not only Shell, are most concerned about when making a huge investment is adequate supply, followed by safety and investment worthiness,'' he said.
''Since PTT is the sole NGV supplier as well as importer, we are not only concerned over stability of supply, but also pricing which will have to be based on the global price in the case of imports.''
As well, he said, there were questions whether the government had a clear policy on subsidies in case gas prices rise.
Mr Tiraphot said he was confident that global gas prices would definitely increase in the future due to heavy competition among major users, particularly China, Japan and South Korea, to secure long-term contracts with gas field operators.
On the investment side, distribution and transport of CNG is costly because it is under very high pressure. Each tanker truck costs at least 20 million baht and each filling station 50 million, he said.
''How can we make such a huge investment without clear adequacy of gas supply in the future?''
In addition, NGV service stations require large areas of land. ''For Shell, we can say that no more than 10 petrol stations in Bangkok currently can be developed as NGV stations due to limited space.''
Mr Tiraphot forecast that oil would remain a major fuel of Thailand for many years, followed by bio-fuels, while NGV development would take longer.
PTT is offering other oil retailers a higher marketing margin to encourage them to sell NGV. The state-owned company would offer a margin of 2.30 baht per kilogramme, up from the existing 0.80 baht, to encourage them to join the campaign.
PTT would also provide 20 million baht in financial support to build NGV infrastructure in each service station interested in selling the fuel.
Negotiations are under way with Petronas, Esso and Caltex, all of which have shown interest in expanding NGV use.
A PTT executive conceded that the firm would have to import NGV in the future but he declined to give a specific time.
''However, we (PTT) will ensure that the NGV supply will be sufficient for local distribution,'' he said.
PTT is also developing an NGV terminal at Laem Chabang deep-sea port to handle imports of natural gas.
He conceded the development of NGV stations might not meet the target of 200 station this year but could reach 150 sites.