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Thai oil giant on track to enter rail

14/09/2018
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Thailand’s state-owned oil company PTT could be on the cusp of entering the rail industry. It has emerged that the company is seeking partners for a joint bid to fund, construct and operate a $7bn high-speed railway along Thailand’s east coast.

(Image via Wikimedia).

In what would be the company’s first foray into rail, the project would link Bangkok with Pattaya and Rayong along with the country’s three main airports.

In a statement, PTT revealed that it was currently in talks with several companies including BTS Group Holdings, which currently helps to run Bangkok’s Skytrain system.

Whilst rail is certainly not part of PTT’s core business, the move makes sense when you factor in that PTT would make heavy use of the new line- PTT has a heavy presence in the Eastern Economic Corridor (EEC) and the rail line would enable the company to significantly cut its logistics costs.

Speaking to the Nikkei Asian Review, PTT’s President and CEO, Chansin Treenuchagron, said:

“More than 50% of our group’s operations, including an oil refinery unit, a gas separation unit, power plants and petrochemical production plants- as well as thousands of our employees- are in the EEC area. So, we think if we won the right to operate the train that links the area, it will help cut costs and create value to our assets and our supply chain”.

(Proposed route of the East Coast line).

This is not the first example of diversification from PTT. 2017 saw the company ‘spin-off’ its retail arm which became PTT Oil and Retail. The move was successful and now generates around 20% of PTT’s overall net profit (which stood at $2.1 billion in the first half of this year). 

Chansin claims that the rail venture would also benefit this retail arm, “If we win the project, we could have an opportunity to expand our retail business, such as placing Café Amazon at train stations’. Café Amazon refers to PTT Oil and Retail’s coffee shop brand which currently has over 2,500 locations across Japan, Laos, Cambodia, Oman, the Philippines and of course Thailand.

The deadline for bids to construct and operate the new railway line closes on 12th November, with over 30 international companies already having expressed interest in taking part. If PTT’s bid proves to be a success they’ll be well on track to enter the world of rail…

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