Chairman and CEO Message
Krairit Euchukanonchai
Chairman
Montri Rawanchaikul
Chief Executive Officer
In the past few years, the climate change has been an important factor in shaping the future of energy industry.
Oil and gas companies have set their net zero targets and shifted business strategies in preparation for the energy transition. PTTEP realizes the importance of not only ensuring energy security for the country but also finding balance during the energy transition. We have set forth a strategic framework with three strategy pillars: (1) Drive Value, strengthening and monetizing the petroleum exploration and production business, (2) Decarbonize, reducing greenhouse gas emissions, and (3) Diversify, expanding into new businesses beyond E&P focusing on future energy and advanced technology.
This strategic framework will solidify energy security in the present and at the same time, work towards our target of becoming a low-carbon organization through exploring opportunities in the development of future sustainable energy sources. In 2023, PTTEP witnessed progress in our efforts as follows:
Strengthening Energy Security in the Present
In respect of Thailand’s energy security, PTTEP in 2023 accelerated the G1/61 production ramp-up. Four wellhead platforms have been installed in addition to the eight existing ones, more than ten rigs have been prepared to expedite drilling activities of exploration wells, and subsea pipelines have been installed. Our goal is to ramp up gas production to 800 million cubic feet per day by April 2024, as stated in the Production Sharing Contract. The Company also increased gas production from other projects in the Gulf of Thailand namely G2/61 (Bongkot Field) and Arthit Field, to stay above the Daily Contract Quantity in order to minimize the impact from energy prices on the general Thai public.
Furthermore, PTTEP was successful in the 24th round of bidding for petroleum exploration and production in the Gulf of Thailand, acquiring two additional blocks: G1/65 and G3/65. Both are located near PTTEP’s existing fields, which will accelerate the project development. This will contribute to the energy supply to meet the demands in the future.
Aside from the progress on petroleum exploration and production business in Thailand, PTTEP made several achievements in Malaysia, one of our strategic countries. We became a partner in an exploration and production block and made three oil and gas discoveries in offshore Sarawak. These discoveries include Chenda-1 exploration well in block SK405B, as well as Bangsawan-1 and Babadon-1 exploration wells in block SK438. The development of these fields can be accelerated via a cluster model to rapidly enhance petroleum production and ensure continuous growth for the Company.
PTTEP is not only committed to growing the E&P business for energy security, but also to exemplifying the highest standards in Safety, Security, Health, and Environment (SSHE) through achieving our target of zero incident organization. Our priority remains the management of Safety, Security, Health, and Environment (SSHE). With cooperation from employees, contractors, community around our operating sites and stakeholders, in 2023, PTTEP had an overall improvement in safety performance in various aspects, such as a reduction in statistics for Lost Time Injury Frequency (LTIF) and Total Recordable Incident Rate (TRIR).
Path Towards Net Zero Greenhouse Gas Emissions
Following the announcement to achieve Net Zero Greenhouse Gas (GHG) Emissions by 2050 through the EP Net Zero 2050 concept, PTTEP initiated various projects aimed at reducing GHG emissions. In 2023, the Company has reduced accumulated GHG emissions by more than 2.4 million tonnes of CO2 equivalent when compared to the GHG emissions intensity from base year 2020.
Looking forward, one crucial initiative to reduce GHG is the Carbon Capture and Storage (CCS) project at Arthit Field in the Gulf of Thailand. Currently, the Front-End Engineering Design has been completed, and it is expected to be operational in 2027. This project aims to reduce carbon dioxide emissions from the production process by approximately 700,000 to 1,000,000 tonnes of CO2 per annum.
To enhance methane management efficiency in support of the Company’s Net Zero goal and our commitment to stay at the forefront of the industry, PTTEP signed the Memorandum of Agreement (MoA) to participate in the United Nations Environment Programme (UNEP)’s Oil & Gas Methane Partnership 2.0 (OGMP 2.0). The Company also pledged the Oil & Gas Decarbonization Charter together with 52 global oil and gas companies as part of the United Nations Climate Change Conference (COP28). Under the charter, PTTEP aims for near-zero upstream methane emissions and zero routine flaring by 2030 (according to World Bank’s “Zero Routine Flaring by 2030” Initiative).
PTTEP also implemented forest conservation and restoration projects covering more than 29,000 rai of land, to increase the sequestration of atmospheric greenhouse gases and carbon offsetting.
Diversify for Sustainable Future
To drive the business diversification in 2023, PTTEP has established the Technology, Carbon Solutions, and Sustainable Growth Group which will oversee the overall exploration of investment opportunities in clean energy to support the Company’s future goal of becoming a low-carbon organization.
In 2023, PTTEP has expanded into clean energy business in various areas. This includes being part of a consortium with five leading global companies, to develop and manage a large-scale green hydrogen production project in the Sultanate of Oman, one of the top potential countries in terms of solar and wind energy. Furthermore, PTTEP has expanded investments in offshore renewable energy for the first time. The Company has invested in the Seagreen Offshore Wind Farm project, the largest offshore wind power plant in Scotland. Upon completion, PTTEP will hold an indirect investment in the project at 25.5 percent proportionately. This investment will generate immediate revenue for the Company. More importantly, participation in these two projects provides opportunities for PTTEP to learn and gain knowledge in the development of new forms of energy and technologies. These advancements will enhance PTTEP’s expertise and experience to develop clean energy projects in the future for ensuring the country’s energy security.
In Thailand, PTTEP signed a collaborative agreement with Japan-based INPEX Corporation under an international collaboration between the Thai Department of Mineral Fuels (DMF) and Japan Organization for Metals and Energy Security (JOGMEC) to conduct a study on carbon storage potential in the Northern Gulf of Thailand. The cooperation will lay the foundation for potential development of Carbon Capture and Storage (CCS) Hub in the Eastern Economic Corridor of Thailand (EEC), to help reduce industrial emissions and support national commitments towards GHG reduction goals.
Furthermore, PTTEP also launched the “Lan Sang Arun” solar power project in Lan Krabue District, Kamphaeng Phet Province, to harness renewable energy for the petroleum production process in S1 Project. This will help Thailand reduce GHG emissions, comparing to the existing conventional gas-fired power generation.
2023 Earnings
For 2023 financial performance, PTTEP generated a total revenue of THB 315,216 million (equivalent to USD 9,057 million), decreasing by approximately 6 percent from 2022. The average sales volume reached 462,007 barrels of oil equivalent per day (BOED), which is on par with the sales volume in 2022, while the average selling price dropped by 10 percent to USD 48.21 per barrel of oil equivalent (BOE) following a decline of global crude prices. However, the Company recorded significantly lower non-operating expenses, including oil price hedging and impairment charges. This resulted in a net profit of THB 76,706 million (equivalent to USD 2,208 million), around 40 percent of which was from the business expansion in Southeast Asia and the Middle East over the past years.
In 2023, PTTEP paid THB 54,280 million of income tax, royalties, and other remunerations to the government, which supports national development in various areas such as community, education, and research & development (R&D).
On sustainability performance, PTTEP broadened the scope and long-term goals in alignment with the United Nations Sustainable Development Goals. Our sustainability operations significantly support nine SDGs: Goals 3, 7, 8, 9, 12, 13, 14, 15 and 16.
As a result of our determination to operate with concerns about community, society, and the environment, PTTEP received 34 awards and certifications from 22 institutions, at both national and international levels in 2023. For example, inclusion in the Dow Jones Sustainability Indices (DJSI) 2023 – World Oil and Gas Upstream & Integrated Industry for the 9th year, FTSE4Good Index Series; Outstanding Company Performance Awards, Sustainability Awards of Honor, SET Award of Honor: Best Investor Relations, and Best Innovative Company Awards from SET Awards 2023; the highest AAA rating in the SET ESG Rating; Top-tier Award for Human Rights Role Model Organization 2023 for the 5th consecutive year; Corporate Governance recognition with “Excellent” rating (5 symbols) and “Top Quartile” placement in the Corporate Governance Report of Thai Listed Companies 2023; ESG Initiative of the Year; and several other awards for various CSR activities.
On behalf of PTTEP’s Board of Directors, Management, and employees, we would like to thank shareholders, suppliers, business partners, financial institutions, public and private organizations, and all stakeholders for continuous support. PTTEP will remain committed to operating for Thailand’s energy security and contributing to a good society through our responsibility for the environment, community, and society, aligned with the Company’s corporate governance and business ethics, fostering sustainable growth for all.