Sector Report

Thai oil & gas – Pumping up

by Narongpand Lisahapanya / Apr 17, 2019

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Once an overlooked segment within Thailand’s oil & gas industry, petrol-station chains are fuelling investor interest. Outlets are now a destination where road-trippers can fill vehicle tanks, buy tasty food and drink, and enjoy a short rest. It is an emerging category in domestic retail that provides oil companies a diverse and growing source of income.

Overlooked business now in vogue
PTT, as the national oil & gas conglomerate, has the largest share of retail oil sales. Its petrol-station outlets were, until recently, regarded by Thais as the firm’s public face. Some saw its basic and threadbare outlets as a form of obligatory national service, given their minimal facilities.

The discovery of natural gas in the Gulf of Thailand in the 1970s and ensuing policy to promote the fuel dampened domestic oil demand. But the scenario changed in 2014 when the government removed gas subsidies, which increased consumer demand for refined oil. The fuel shift coincided with a makeover of domestic street-side oil retailers, which started to offer rest areas, clean toilets and convenience stores, heralding a new era in roadside refuelling.

Petrol-station chains fuel roadside retail niche
Our deep-dive into this long-overlooked segment of the oil & gas industry takes a close look at Thailand’s top-four petrol-station players: PTT, Bangchak, PTG Energy and Esso. PTT leads the pack in retail oil sales volume while PTG has the most oil outlets nationwide. We estimate that PTT has the greatest gross profit per outpost, but the highest capex due to its large floor area.

PTT versus PTG
PTT and PTG are contenders for the top petrol-station-operator title. The former’s competitive advantage is its wide network of franchise-run outlets which results in capex savings and enables it to sell oil wholesale on a cost-plus basis to its station operators. PTG’s edge is its rapid network expansion, but the company’s late entry into the non-oil retail segment means it has lower sales volume per station.

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