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.
"We need to upgrade our rail transport system because the costs of carrying gas via rail are 50% cheaper than carrying gas via road," Mr Saran said.
The upgrade will help cut transport costs for about 600 tonnes of LPG per day that has been carried from Nakhon Sawan in the lower North to the northeastern city of Khon Kaen.
PTT is in talks with the State Railway of Thailand about getting special freight rates in return for buying the locomotives. It expects the first lot of 10 locomotives to start operations by 2017.
However, demand for LPG in the North and Northeast has dropped significantly since the LPG price was floated in October 2014. Consumption in the regions used to be 800-1,000 tonnes per day when the retail price was capped at an unrealistic low of 18.13 baht per kilogramme, well below the global price of 25 baht.
Meanwhile, PTT also plans to turn its LPG storage centre in Si Racha in Chon Buri province into a facility for re-exporting gas to the Mekong region.
The company has invested nearly 10 billion baht to double its LPG storage capacity to 250,000 tonnes over the past three years as LPG demand surged in the transport sector.
However, the global collapse of oil prices has made the price of LPG unattractive compared with oil. Demand for LPG in the transport sector has fallen sharply by 12.1% to 2,026 kilotonnes of oil equivalent last year, leading PTT's storage centre to have excessive supply.
To deal with the oversupply at home, PTT plans to enter the bigger LPG market of Asean, aiming to enhance its storage and facilities for export of the gas in the region.