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AseanAffairs Magazine September - October 2010

Thai Prime Minister
Abhisit Vejjajiva

Four months on in the reconciliation process Asean Affairs examines the progress and shortcomings of Prime Minister Abhisit Vejjajiva’s plan to bridge

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PTT’s new model

Tower A, the green building, with PV Panels and green roof in the PTT HQ, Bangkok

     Located in Thailand, a country whose energy needs are reliant on fossil fuels (oil, natural gas, petrochemicals, coal), 30-year-old PTT, Thailand’s largest energy company and #116 on the Fortune 500, is actively pursuing a course of sustainability.

Talking to AseanAffairs in his office, Senior Executive Vice President for Corporate Strategy Nuttachat Charuchinda noted that the world’s oil reserves are expected to phase out in 40 years, gas reserves in 60 years and coal in 120 years. Thus, the firm is adopting the motto, “profit, people and planet,” in its drive to develop alternative energy sources.

The company has set goals that it wants to achieve by 2015. They are to crack the Fortune 100 list and to be among the top 10 firms on the Dow-Jones Sustainability Index by 2013.

He emphasized that as an Asian company, PTT is a unique model differing from western companies in that it is focused on petrochemicals and is more diversified than western companies.

He pointed to the new PTT green building corporate headquarters as a symbol of the company’s future. It is the first building in Thailand and Southeast Asia to receive a Leadership in Energy and Environmental Design (LEED) certificate and is topped off with solar panels on the roof.

PTT invests 5 percent to 10 percent of its capital expenditures, US$100 to US$200 million in the renewable energy sector each year. This investment rests on PTT’s three pillars: sustainability, corporate governance and corporate social responsibility. The company has had a long-time interest in green activities, especially reforestation.

The alternative energies that PTT is looking at include solar and wind, but the firm is more focused on producing energy from biomass, as Thailand is a major producer of sugar cane, and the availability of this raw material is a natural incentive. Another project, the use of algae to produce diesel fuel, is still in the research stage but there are plans to establish a pilot project for commercial production.

In 2012 European Union aviation regulations will go into effect requiring the use of jet biofuel. This new type of fuel is made through hydrogenation technology developed by PTT’s laboratory two years ago. PTT Aromatics and Refinery PLC plans to invest US$150

million to construct a plant to produce the fuel. Mr. Nuttachat mentioned that Brazil was the top producer of biofuel at this point in time.

Another PTT goal is to become the “bioplastics hub of Asia” utilizing tapioca cassava and sugar cane as the base for the development of degradable bioplastics, but the time frame to become the hub is uncertain. Thailand produces an abundance of these crops.

In a recent development, NatureWorks LLC, the world’s number one bioplastics company, has been in talks with potential partners including PTT Plc to jointly invest in a large-scale bioplastic plant in Thailand worth about $400 million.

Nuttachat Charuchinda

The plan could make Thailand the location of the first polylactic acid (PLA) plant in Asia in 2014 and the second globally, according to Marc Verbruggen, president and chief executive of the Minnesota-based company.

NatureWorks’ PLA plant in Nebraska opened in 2003 as the first of its kind in the world. It doubled its capacity to 150,000 tonnes annually in the middle of last year. Verbruggen indicated a final decision would be made by end of 2010, with plant construction to take three years, with operation set for late 2013 or early 2014.

NatureWorks is currently in the process of selecting the location of the 150,000-tonne facility. Brazil is among the candidates, while other potential locations are Thailand, Malaysia and Singapore, he said.

Factors in the final decision are local availability of raw materials including tapioca and sugarcane, markets of the product, and incentive programmes.

“We are not looking at Thailand as the potential location based on the local market only but also the advantages for our product to be easily shipped to North Asian countries such as China, Japan, Korea and Taiwan,” Mr. Verbruggen said.

Thailand, meanwhile, also has an incentive programme in place for bioplastic investment, but the question is “is it good enough?” observed Mr. Verbruggen. The company is also looking for potential local partners who have expertise in petroleum-based polymers, he added.

Siriwan Chierapong, executive vicepresident for business development and project management of PTT’s petrochemical and refining operation, confirmed that the Thai energy giant had discussed a PLA venture with potential investment partners, including NatureWorks.

Netherlands-based Purac, which produces lactic acid (LA) in Thailand, is also among potential partners, she added. In terms of traditional energy sources, she said that PTT is interested in clean coal technology with particular focus on developing coal-to-liquid and coal-to-gas...............

>>  We have no more room to expand in Thailand so we have to expand outside for oil supplies and other opportunities. <<
An overhead view of the green roof and the helipad floor in the PTT office complex.



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