Will Thailand’s energy expansion bear fruit amid international competition?


The energy market is extremely competitive at present, particularly in an Asia-Pacific region that is rich with natural resources. From traditional energy sources to alternative and renewable options, this market is expanding at a rapid rate and creating a challenge for any firm keen on establishing a viable share of the action.

This is certainly the case in Thailand, where firms have been empowered to expand by recent regulatory and energy law changes. Despite this, these plans may be impacted by intensified competition in the marketplace, with multinational rivals Rinnai having recently expanded their operations in Australia and overseas.

The good news for Thai energy firms

Last month, Thailand’s oil and gas firms were buoyed by a series of events, with the first being the decision of a military-appointed assembly approving a progressive change to the nation’s energy laws. This proposed to overturn a mandated monetary concession to Thai authorities to drill in local oil fields, creating an opportunity for independent firms to opt out of restrictive production sharing agreements.

Not only will this enable Thailand’s energy firms to expand their own operations, but it will also create a climate in which the nation’s multinational entities are considered an exciting investment opportunity (both at home and abroad).

As if this was not enough, the assembly also struck down a clause that could have potentially led to the establishment of a single, government-backed oil company in Thailand. Proposed by the merger of PTT Pcl (a firm in which the Thai government remains a majority shareholder) and the privately-owned giant PTTEP, this would have created a dominant entity that would have significantly impeded any genuine competition in the energy market.

Why the expansion of Rinnai Australia may throw a spanner in the works

While this is good and progressive news for Thailand, the expansion of Rinnai Australia complicates the issue slightly. Having opened a new, world-class manufacturing facility to compliment the existing, Japanese R & D centres that exist in Australia, the brand is focusing on developing refined, renewable and more affordable energy technology that can reinvent the market as a whole. In fact, the new 68,000 square metre site could well become a hotbed of innovation that supplants traditional fossil fuels, potentially undermining the growth and investment potential of Thailand’s companies.

Trading platform LCG have certainly reported renewed interest in the movements of Japanese firm Rinnai, for example, particularly among day-traders. The same can be said for the Australian energy market as a whole, where clean and renewable sources drove a cumulative investment of $4.2 billion in 2016 alone.

Make no mistake, it is these firms and markets that are currently attracting the attention of investors, while filling gaps and opportunities that currently exist in the international marketplace.

The Future for Thailand and the Energy Market as a Whole

In some ways, the future remains bright for Thailand’s energy firms, both from the perspective of expansion plans and driving international investment. The opportunities for these firms are sure to be restricted by the expansion of global giants such as Rinnai, for example, along with the significant clean energy investments being made by better-resourced nations. So while Thailand is making up ground fast in the energy market, it has a little way to go before its firms can compete with more established multinationals.