Reuters-INTERVIEW-Thai PTTEP speeds

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Subject: Reuters-INTERVIEW-Thai PTTEP speeds diversification 

INTERVIEW-Thai PTTEP speeds diversification
12:08 a.m. Jun 14, 1999 Eastern
By Anchalee Koetsawang

BANGKOK, June 14 (Reuters) - Thai gas giant PTT Exploration and Production
Plc is accelerating its diversification with talks to buy into a local power
firm and swap assets with French oil firm Total.

PTTEP chairman Surakiart Sathirathai told Reuters that he expected his
gas-rich company's strategy to diversify into the oil and power business to
materialise soon.

The move was crucial for the company to remain competitive as a natural gas
glut loomed and greater Thai market liberalisation took shape.

``Things are taking shape. It is very important that PTTEP diversify from
natural gas which accounts for most of our assets at present,'' he said in
an interview.

``Some of these assets have great long-term potential but are not yet
operational. There is a sunken cost here and PTTEP would like to swap it
with oil assets which are already or are close to production stage,'' he
said.

``Oil does not have to depend on the local market as it can be sold anywhere
in the world.''

``For those who look long-term, our gas assets in Thailand offer good
opportunity because gas can be sold to Indochina, south China and Myanmar,''
he said.

Surakiart said he recently approached Total on the possibility of swapping
PTTEP's natural gas assets in the Gulf of Thailand for some of Total's oil
assets.

``I floated the idea to Total when I visited the company in Paris last
month, and the company seemed interested,'' he said. ``The company is close
to finishing the proposal, and I expect that a discussion could take place
next month.''

He said Total's assets that might be up for a swap could be in the Middle
East.

PTTEP has also been in discussion with U.S. oil and gas company Unocal on a
similar asset swap proposal.

PTTEP was likely to choose the better deal instead of going into deals with
both firms, Surakiart said.

The Thai firm said on Friday it was in talks with Thai Oil Co over acquiring
a stake in its 100-percent owned subsidiary Thai Oil Power Co.

Surakiart said PTTEP had hired Lehman Brothers as advisers to consider the
size of the stake his company should take and the appropriate price.


Thai Oil Power owns a 117-megawatt small power producer project in eastern
Chon Buri province and a 700 megawatt power plant that is expected to be the
first independent producer to contribute to the state grid later this year.

``I cannot reveal the size of the stake PTTEP intends to buy now, but I can
say it must be substantial enough to allow PTTEP to have a say on
management,'' he said.

Surakiart said PTTEP said the small power producer project had already
started generating income. He said the 700 mw project would come on stream
later this year and already had a contract with state-run Electricity
Generating Authority of Thailand.

``So, there will be no problem on marketing. Moreover, this project (700 MW)
can be expanded in the future,'' he said.

PTTEP was keen to invest more in power projects, and Thai Oil Power would
provide an entry for the company into this sector, he said.

The investment would secure the market for PTTEP after the government
liberalised the energy market in 2000 and allow producers to sell directly
to end-users without having to go through state-run Petroleum Authority of
Thailand, which holds a 61 percent stake in PTTEP.

``This investment is crucial because we are not the only producer in the
market. Buying into power plants would ensure that they would use gas from
PTTEP projects. It is an investment trend for major oil and gas companies
around the world,'' he said.