CNG & LPG: Saga of subsidized gas continues

As oil prices dropped drivers abandoned subsidized CNG so no losses for PTT this year, but LPG subsidies continue.

ENERGY & GOVERNMENT SUBSIDIES

CNG & LPG: Saga of subsidized gas continues 

Sole supplier PTT credits cost cuts
7/02/2017
Yuthana Praiwan

Energy giant PTT lost money selling compressed natural gas (CNG) for more than a decade as Thailand's sole CNG retailer.

The company expects to make money for the first time this year.

The shrinking losses are a result of cuts in operating and transport costs put in place over many years.

This is according to Wirat Uanarumit, chief operating officer for upstream business.

LOSSES FROM SUBSIDIZING VEHICLE FUEL

PTT was forced by the government to supply public buses in Bangkok for more than 20 years at lower than market prices.

During the time that global oil prices surged above US$100 a barrel, CNG became more popular among motorists as they switched from petroleum to CNG, widening losses further.

The company suffered more than 20 billion baht in losses until CNG prices were floated in mid-2014, when the government started to free up prices gradually, leaving a small subsidy to the CNG business.

CNG VEHICLES JUMPED 4000% in 2013

The number of vehicles compatible with CNG jumped 4000% from 10,000 units in 2007 to 410,000 units in 2013.

After CNG floating prices were floated for a few years, losses from CNG dropped to 10 billion baht in 2015 and dropped further to 5 billion baht in 2016.

FALLING DEMAND FOR CNG SINCE 2013

Demand for CNG fell more than 10% from 9,800 tonnes a day in 2013 to 7,800 tonnes a day by the end of last year.

PTT has cut the number of CNG refill stations from close to 500 stations to 436 now.

CNG, LPG and LNG: WHAT IS THE DIFFERENCE?

Most people have heard of LPG and CNG used as a cheap car or vehicle fuel.

Over the last ten years many vehicles were converted to use LPG or CNG to save money on fuel costs when gasoline jumped in price. Then when the price of gasoline fell, these alternative fuels became less popular and drivers went back to using gasoline.

What exactly is the difference between CNG, LPG and LNG?

All of them are all stored in high pressure tanks on vehicles but they differ in many respects.

Compressed Natural Gas or CNG consists mostly of methane and is drawn from gas wells or in conjunction with crude oil production.  It is lighter than air which means it will dissipate if there is a leak making it much more safe to use than gasoline or LPG. 

Liquefied Petroleum Gas or LPG consists of mixtures of propane, propylene, butane, and butylene "produced as a by-product of natural gas processing and petroleum refining [at a refinery]... One challenge with LPG is that it can vary widely in composition, leading to variable engine performance and cold starting performance... LPG is heavier than air, and thus will flow along floors and tend to settle in low spots...  Such accumulations can cause explosion hazards, and are the reason that LPG fuelled vehicles are [sometimes] prohibited from indoor [parking lots]."

Liquefied Natural Gas or LNG is a high-cost alternative with "natural gas stored as a super-cooled (cryogenic) liquid... The advantage of LNG is that it offers a [high] energy density comparable to petrol and diesel fuels, extending range and reducing refuelling frequency" (see here & here).

LPG SUBSIDIES CONTINUE

The retail price of liquefied petroleum gas (LPG) for February has been increased by 67 satang to 20.96 baht a kilogramme to reflect global LPG prices, which rose by US$90 (3,154 baht) a tonne, says the Energy Policy and Planning Office (Eppo).

The new prices are effective today, with the cost of a 15-kilogramme cylinder rising by 16.5 baht.

At the same time, energy policymakers yesterday approved a partial subsidy of 2.33 baht a kilogramme through the state Oil Fund to absorb the rise, meaning the fund will spend 556 million a month to subsidise the gas, up from 400 million before.

The LPG retail price hike is the first such rise since last February.

The price of LPG is expected to decline gradually throughout 2017.

http://www.bangkokpost.com/business/news/1194201/cng-to-snap-string-of-losses

http://www.bangkokpost.com/business/news/1194153/lpg-retail-price-hiked

http://www.afsglobal.com/faq/gas-comparisons.html

http://www.brighthubengineering.com/power-plants/40017-lng-cng-and-lpg-what-is-the-difference/

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