Eastern Seaboard Report March 2016 – Prepared by Mark Bowling, Chairman BCCT Eastern Seaboard
SI RACHA, CHON BURI: PTT Plc, the national oil and gas conglomerate, plans to invest up to 4 billion baht to upgrade gas transport via the railway system over the next five years. Its existing locomotives for transporting liquefied petroleum gas (LPG), mostly to the North, have been in use for more than 25 years and are deteriorating. Saran Rangkasiri, executive vice-president overseeing oil business, said the plan to upgrade gas transport included the purchase of 20 new locomotives and development of LPG storage facilities along the rail route. PTT expects to buy the locomotives from GE, whose quality is widely accepted by transport operators. Competition in the warehouse market, particularly in Samut Prakan and the Eastern Seaboard, is expected to heat up this year as local developers get in on the act, according to property consultant Knight Frank. Increased investment in warehouse projects outside traditional areas is also expected, thanks to the government's planned 2-trillion baht investment in infrastructure, which includes the East-West Economic Corridor and the Chinese-Laotian-Thai rail link. Marcus Burtenshaw, executive director and head of property consultancy Knight Frank Thailand, said land values in the most popular locations of Samut Prakan that are suitable for warehouse development were starting to reach levels where new projects were becoming harder to justify. According to Knight Frank Thailand's research, Samut Prakan and Chon Buri provinces are the most strategic locations where logistics service providers base their distribution centres. Samut Prakan tops the list in terms of supply, accounting for 36% of the entire market. Chon Buri province, which is home to Laem Chabang seaport and a hub for automotive production, places second with 24% of supply. PTT Plc, the national oil and gas conglomerate, plans to turn its existing liquefied petroleum gas storage plant in Chon Buri into a facility for LPG for re-export in the Mekong region. Auttapol Rerkpiboon, senior executive vice-president overseeing the oil business unit, said the LPG storage facility was built during a time of fast-rising demand in the transport sector over the past few years, largely due to the government subsidy that pegged the price at an unrealistically low level. The LPG wholesale price was capped at US$333 a tonne, well below the global price of $500-$700, at a time when global gas prices were surging in line with oil prices, which rose above $100 a barrel. As a leading LPG trader during 2012-14, when demand for the gas surged, PTT had to invest almost 10 billion baht to more than double its LPG storage capacity to 250,000 tonnes a month. But the recent collapse in oil prices cut demand for LPG in the transport sector by 12.1% to 2,026 kilotonnes of oil equivalent in 2015. PTT plans to meet with energy policymakers to discuss ways to maximise its LPG storage capacity utilisation in order to support LPG exports. The delayed Thai-Sino high-speed rail project has been scaled down to about a third of the distance it was due to cover as a result of the Thai government's decision to wholly invest in it. According to the government, the railway route has been shortened to 250km and will stretch from Bangkok to Nakhon Ratchasima. The original plan was for a 845km route from Bangkok to the border province
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British Chamber of Commerce Thailand, 7 Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 085 2828 120 Email: mwbowling@savills.co.th www.bccthai.com