EGCO links up with South Korean peer SK E&S in push for LNG opportunities
28 December 2018
ELECTRICITY Generating Plc (EGCO) will join with South Korea-based SK E&S in looking for opportunities to enter more markets in the liquefied natural gas (LNG) business, the company’s president Jakgrich Pibulpairoj said yesterday.
The company will compete in the auction of a new Independent Power Producer (IPP) power plant in the country. It will also invest up to Bt17 billion to develop ongoing projects and aim to finish at least two merger and acquisition (M&A) deals in 2019, expecting profits to grow by 6 per cent.
The company and SK E&S are expected to sign a contract on the cooperation in January, Jakgrich said. The collaboration in the LNG business between the two organisations can proceed both within Thailand and in international markets.
Furthermore, Electricity Generating Authority of Thailand (EGAT), the parent company of EGCO, has been tasked with supplying 5 million tonnes per year of LNG for the Kingdom, and importing 1.5 million tonnes per year in 2019.
The contract signing will not prohibit other partnerships.
“The company has not joined the auctioning of the first batch of LNG by EGAT because the auctioning regulation requires the participating parties to own production facilities. We expect to participate in the next round of auctioning if the participating conditions are relaxed,” Jakgrich said.
He also said that LNG is a new business that EGCO is interested in, while also being a point of interest for foreign firms.
“Hence, we see that the LNG business has potential in Thailand, and that our company has sufficient capabilities to invest in LNG because we have a strong alliance with SK E&S, the second largest importer of LNG after Japan,” he said.
He further noted that even though the government plans to reduce the amount of LNG imports to 20 to 25 million tons per year in 2037 from the originally set 34 million per year in 2036 under the new Gas Plan, there are still business opportunities in LNG.
EGCO has submitted a request for proposal (REP) for a Ma Ta Phut Industrial Port Project phase 3 in accordance with the policy of the parent company, which has been encouraging investments into new businesses.
For 2019, the company has set a target for profits to grow by 6 per cent year on year.
Jakgrich added that the target for this year may be missed as the company has sold a power plant in Masinloc in the Philippines.
In 2017, EGCO had a net profit of Bt11.8 billion and operating profit of Bt9.27 billion, while in the first nine months of this year the company’s net profit was Bt21.8 billion.