PTT Public Company Limited (PTT) Earnings Call Transcript & Summary

[indiscernible] '23 Knowledge Sharing Session. My name is [indiscernible]. I will be your host for today's event. And before we start, I would like to invite Khun Tanapon Prapapan, Vice President, Investor Relations on stage to give us opening remarks.

Good afternoon, ladies and gentlemen, both in this auditorium and also hosted through the MS Team. I am deeply honored and grateful for [ responding ] in this event. Today, it's a great opportunity for PTT to communicate and present our facility management, which cover our 3 dimension: environment, society, governance, including strategy, policy or [ progressive EGAT ] that PTT carried out CCS, hydrogen and reforestation projects. I am hopeful that everyone of you gain deeper understanding of PTT sustainability, moreover for attendee, which are at the fiscal event. After the sharing session, I would like to extend our invitation to join us for [ see the fabrication treatment ]. The event will be over at the [indiscernible] building. Lastly, I trust this information is useful and hope you enjoy this event. Thank you. [Foreign Language]

Thank you, Khun Tanapon for the warm welcoming speech. So far today, agenda, we will separate into 3 main sessions. The first session will be the discussion about the overall PTT sustainability management policy and strategy. And there will be the summary of climate action plan and key initiatives. Then we will move on to the second session. The second session will focus on PTT group decarbonization projects. And today, it's a great honor to have project leaders from 3 projects which is CCS, hydrogen and reforestation, to give us a brief information about their project development. And the last session will be Q&A. So if anyone has any questions, we will open the floor to Q&A on this session. And from the online platform, if you have any questions, please feel free to drop your question in the chat box, and [ I will start to ] collect and address into the Q&A session as well. So let's begin with the first session. So please allow me to introduce our speaker from PTT Sustainability Strategy team, Khun Kaniknun Chinachaimongkol; Khun Wannaprapa Karom, and Khun Purachet Potewiratananond, Senior Analyst from Sustainability Strategy Department. So please join me in welcoming our speakers on stage.

Good afternoon, and a very warm welcome to those joining us here and online. My name is Kaniknun, and it's a pleasure for me and my colleagues from Sustainability Strategy Department to be here to share with you our story, this year's sustainability initiatives at PTT towards a more sustainable future. Well, for over a decade, PTT has been at the forefront of sustainability management. Our journey has been driven by a deep commitment in environmental stewardship and corporate sustainability. Today, we are excited to share how these efforts are integrated into our vision and operational practices. As we navigate through today's presentation, we will explore how global trends are driving the evolution of the energy sector and how PTT is not just keeping pace, but actively shaping the future. These trends, climate change, technological advancements and societal shifts are not just challenges. They are actually the catalysts for us to form our innovative responses. They compel us to think beyond the conventional energy paradigms and adapt to a rapidly changing world. Our vision, powering life with future energy and beyond is not just a statement. It informs and inspires PTT's strategic direction. This vision is supported by 2 main areas. The first one is future energy. We are actively expanding our portfolio to include renewable energy sources like solar, wind and innovative ventures into energy storage systems and electric vehicle supply chain, for example. The second one is beyond energy business. Our strategy extends into life-enhancing sector, such as pharmaceuticals, medical equipment, and high-value businesses that influence mobility, lifestyle and infrastructure. At the heart of our vision, here is the aspiration for a partnership and platform, technology for all and transparency and sustainability. These aspirations guide our approach to sustainability, ensuring that our innovation, our partnership and every decision advances this commitment. And to quantify this commitment, we have set ambitious corporate targets to be achieved by 2030. The first one is business growth, is to expand our energy business significantly aiming for a 9 million ton annual increase in the LNG portfolio and a total of 20 gigawatts in power production capacity, with also 15 gigawatts from renewable resources. The second coverage target is new growth. Drive the future energy and beyond business to generate more than 30% of the total net profit, emphasizing on clean and sustainable innovations. And lastly, clean growth is to achieve a substantial 15% reduction in greenhouse gas emissions compared to the 2020 baseline level. Next, let's explore into PTT sustainability management process. This process is designed to align and integrate sustainability into core strategies and daily operations. The first step is -- the process actually begins with comprehensive internal and external factor analysis and what we call materiality assessment. This step prioritizes risk and opportunities relevant to stakeholders and long-term success. The next one, we establish policies and management frameworks. This includes drafting master plans and action plans that are regularly reviewed to align with PTT sustainability management system. Next, with those strategies already in place, we move to action, implementing these plans and closely monitoring the progress. This step involves managing key sustainability issues with processes that meet short-term and long-term goals. It's here at this step that our commitment becomes more visible and measurable. And next to the fourth step here is assessment and management review. Regular assessment and reviews by the management team ensure that our initiatives remain on track and that it aligns with the strategic directions and organizational goals. Lastly, we disclosed the sustainability management performance to stakeholders through standardized reports and methodologies ensuring that PTT's data is accessible and compensable, especially to you, investors. Now we will dive into the materiality assessment process, which is very important for identifying key stakeholders' concerns and business impacts. Central to the assessment here is the concept of double materiality. Traditionally, it focuses on financial data. But very recently, the scope has broadened to include ESG impacts as well. But why is it called double? On one side, it's about understanding how broader changes like climate variations or community shifts could influence the company's future. On the other hand, it examines the footprint left by the company on the environment and communities. This double or dual perspective ensures that important impacts don't go unnoticed and that it helps us in identifying priorities and balance both business resilience and social responsibility. The first one here is to understand the context of the company. Our journey begins with study both internal workings of PTT such as the vision, mission and operational activities and also study the external forces such as global trends and standards. This step includes gathering insights through surveys or interviews, ensuring that we capture the voices and expectations from our stakeholders across the value chain. Next, we identify our footprint. Both the marks we leave or the actual impacts that already existed and the shadows we cast ahead into the future or what we call potential impacts. All of these impacts can be negative, like environmental damage that we must mitigate or also it can be positive, such as contributions to local communities or even the innovations that drive us to sustainable development. Next is the significance of the impacts. Now the question is how large is our footprint and how broad is the shadow of the potential impacts that may happen in the future. Well, as I think the significance of the impacts involves looking at their scale, scope and the likelihood of occurrence. It's a balanced view considering both the adverse effects that we must address and also the positive impacts that we aim to expand. Lastly, with the insights that we already gain, the next step is to prioritize these impacts based on their importance and urgency. This is important for focusing efforts on how we can make the most difference and for effective communications such as disclosing in the one report of what stakeholders are interested in and what matters most to them. All right. So let's continue to explore on how we turn all of these results into actions. PTT systematically manages all of our material topics identified through our assessment by assigning each and every material topic to specific departments responsible for developing clear action plans and setting achievable goals. But also here are the top 3 topics that our assets from our very recent year 2023. The first one is climate action. Climate, of course, remains a priority, exchange rate by the global initiatives like the COP 27, because PTT's role is very vital as a leader in reducing Thailand's greenhouse gas emissions. And integrating all this climate risk and opportunities into planning, PTT's actively transitioning ourselves into future energy and beyond. This includes setting ambitious targets for, like I mentioned before, new growth, business growth and clean growth through portfolio transformation to align our vision with powering future with energy and beyond. The second material topic is innovation and technology which is central to PTT's strategy for developing new sustainable products and services. This innovation support our transition to new business areas, including renewable and, for instance, EVs. The third top 3 is occupational health and safety, ensuring that the safety and health of our employees and contractors remains dominant and PTT's dedicated to fostering a safe working environment. This includes compliance with safety regulations and robust risk management practices to maintain our business continuity without compromising our operations or stakeholders' trust. To manage all of these topics effectively, PTT also allies with the Dow Jones Sustainability Indices or the DJSI expectations, focusing on all economic, environmental and social impacts that are most critical for our business performance. Here's the example of how we approach this. For example, the first one, long-term targets and metrics, each material topic is tied to specific measurable targets with a clear time horizon of, for example, at least 3 years. For instance, our climate action targets include specific reductions in greenhouse gas emissions and increases in renewable energy capacity, as you can see from our corporate targets. The second one is executive compensation. Performance metrics related to these material topics are directly linked to executive compensation. This ensures that the executives are accountable and allies the interests of our management with the long-term sustainability goals. For example, achieving our targets for reducing emissions and enhancing safety standard is already reflected in the compensation packages for our top management. Now, this [ part of it ] outlines how PTT's materiality assessment directly informs and chase our 5-year sustainability strategic direction. This framework is structured around 3 pillars of ESG, environmental, social and governance. In governance, our emphasis on integrity and adapting to business growth is a direct response to the need for governance and compliance. The second pillar, the environmental dimension for our strategy is a direct reflection of our commitment to climate action. And as I said before, innovation and technology as highlighted in our materiality assessment. And for us to develop towards a low carbon society and environmentally friendly operations are very significant for PTT today. This includes driving resource utilization based on the circular economy principle and aligns with the identified need to manage environmental impacts proactively and innovatively. Lastly, in the social dimension, our focus on enhancing community self-sufficiency and promoting a safe working environment resonates with the priority material topics of occupational health and safety. Our strategic direction aims to uplift the quality of life for both the local communities and to ensure the safety and scale of our workforce, as you can see that we also focus on both internal and external stakeholders at this point. This also includes respecting human rights throughout our supply chain, ensuring that our business growth do not harm societal enhancement. And next, my colleague Khun Wannaprapa will take over to discuss how we govern our sustainability progress all the way to the journey for benchmarking and disclosure.

Thank you so much, Khun Kaniknun. And I hope you have a very good afternoon. Did you have a cup, because my part is very interesting and a bit of new -- some like you all like [ coffee dive into your end ] because it's all about the structure, it's all about the policies, all about like how we govern our entirety. So let me start first with the SM policy. So PTT, we do acknowledge the importance of conducting businesses with responsibility and we also like communicate this commitment through the [ numbers ], policy and statement as follows: I will start first with our own policy, the PTT sustainability management policy. This is to address our commitment to managing the sustainability across 3 dimensions following with environment, society and the governance. And also this policy was jointly signed by the Chairman of the Board of Directors and the Chief Executive Officer and President. And also like the -- on the right-hand side is the corporate governance policy. This has also fostered need to perform the [ efficient ] entirety in conducting business with excellent and corporate governance and management practices. This imprecise creating the sustainable values for all the shareholder prioritizing stakeholder interest and also the maintaining ethical business conduct and ensure the transparency and accountability, and this policy was also signed by the Chairman of the Board of Directors. And also it's come to a very important policy human rights. Nowadays, we talk a lot about the human rights. We also have a human rights principles to promote human rights in our operation through all the supply chain, as Khun Kaniknun mentioned. We do publish the human rights statement, designed by our CEO. Moreover, as you still see like anti-fraud and anti-corruption policy, we'd also have the QSHE policy as well, which is like recognized and along with involving circumstances and issue that related to corporate sustainability. So now I'll talk about the policy that we have endorsed. So I would like to move to the next slide. We're now talking about the PTT sustainability management master plan. This master plan is due for 2021 to 2025. This is to drive the implementation of sustainability management and to achieve a long-term target that we would like to estimate the sustainability management master plan for all the 3 dimensions. And this is consists of the 7 elements which is like: governance structure, the work process, the material topics, sustainability road map, a long-term target, as well as strategic direction. And this framework is also support SDG as Khun Kaniknun mentioned earlier, and therefore, the policy owner will manage the topic accordingly. And also, like you may want who governs this policy. This policy is endorsed by the Corporate Governance and Sustainability Committee, which we will report it quarterly. Now I move to my third slide, is all about the structure is SM governance structure. This structure, you can see its very strong governance for work. It's to ensure that we will drive our sustainability management and implement it well. So this structure is [ an alive ] a very clear role and responsibility, as Khun Kaniknun mentioned, that also our CEO or Board of Committee is also recognized and also responsibility of this sustainability management. So not only the Board of Director, we also have a committee of management level executives and as well as an internal department to ensure that this effort will be advanced support, monitor and evaluate overall sustainability initiative. And this is all the data collection analysis and of course, the reporting of operational performance and aligned with the PTT sustainability management master plan, it will be well reported and reviewed regularly. And to ensure that we have all the assessment process, we do have both internal and external assessment system and report to management level as well. So I will move to the next slide. You may wonder this is PTT, we are as a PTT group. So how we govern our entirety? So we do govern our subsidiary by establish and implement the PTT Group rule of conduct. And this PTT Group rule of conduct, it describes the same work mechanism and the principle in overseeing the policy and operation of the company's PTT Group, to make sure that is appropriate level of their business through the teamwork and FID group governance. Now after I talk about the policy, the structure, the PTT Group rule of conduct into our entirety. Now is time to compare ourselves. I'm sorry -- so yes. All right. Just to make sure that you're still with me. So to answer that, like the policy and ambitious direction that Khun Kaniknun presented to you, it will disclose and is well benchmarked with other peers. To have the history, this is such a massive long story of that. We do publicly disclose the sustainability data and performance since 2008. Since then, we adhere to the sustainability reporting standard at additional and government level. For example, we do align with DRI, we do align with SET. We do align with [ TCFD ] as well as IR, IIRC, SDG, IFRC, et cetera, which I'm sure you're very familiar with it. So I will perhaps skip on that because it's going to be wasting your time. But for the benchmarking that I would like to emphasize is like PTT, we do have been included as a member of the Dow Jones Sustainability Index, DJSI, in both the world index and emerging market for 12th consecutive year since 2012. And the next slide. Yes all right, as my last part is about the ESG benchmarking and the awards. So recently, we have received ESG award and undergone sustainability performance assessment by various investors and institutes, both internationally and nationally leveled. For example, we received the SET Award and 3 significant awards, which is our Sustainability Award of Honor, the Indonesian company award of honor, and of course, the host for you today, the outstanding listed company in Investor Relations Awards, that we have just received that. And you saw for the social dimension. We also received the Role Model Organization Award on the Human Rights in 2003 (sic) [ 2023 ], presented by the Rights and Liberties Protection Department, Ministry of Justice. And this award, we also have received for the 3 consecutive years. And for the environment, we also received the Climate Action Leading Organization, or CALO, which is organized by Thailand Climate Action Conference in 2003 (sic) [ 2023 ], organized by the Public Organization for Thailand Greenhouse Gas Management Public Organization. And for the rating below -- we -- once again, I would like to recognize -- I was working hard on sustainability practice and we chose this as member of DJSI in both World Index and the Emerging Market Index, for 12 consecutive years again. And also, we also received ESG Ratings of AA up to A in the -- by MSCI. And so we received the B rating for CDP and also for the FTSE4Good, we also have received [ for 12 years now ]. And for the first ESG, we have received the vote for ESG rating for 2003 (sic) [ 2023 ], achieving the highest AAA rating. And this is all for me, but our part is not yet finished. So last, but not least, I would like to invite Khun Purachet for presenting the climate change management, which are -- we are very pretty exciting to present about that. So please welcome to Khun Purachet.

So you have -- so here we have the understanding of the PTT, how PTT manage sustainability within our company. And I'm going to move to how PTT will achieve carbon neutrality by 2040 and Net Zero emission by 2050. By doing this, we apply and adopt Net Zero guideline, carbon neutrality and TGO Net Zero emissions guideline. Our base year of emissions start from 2020, which is around 11 million tons. And you will see from the graph above on your left-hand side, the absolute emissions start to decline as we have the amount of GHG removal. This amount of removal we verified by third-party and along this journey to 2050, we will have removal and offset amount of GHG emissions. And therefore, to manage the GHG emission annually, we have set a short-term target with both PTT and PTT Group level. And this, we're able to control the amount of GHG emission within the target. In addition, we have set a medium-term target to reduce the GHG emission by 15% in 2030 compared to the base year in 2020. Our long-term target achieved carbon neutrality by 2040 and Net Zero emissions by 2050. To achieve this target, PTT [ accelerated ] the 3P decarbonization pathways to execute potential decarbonized initiative. The 3P consists of fugitive lower emissions, PTT reduced GHG emission in business operation as much as possible, which aim to decline emission in our operation by 15% within 2030. PTT Board controlled leak and increased energy efficiency. There are plans to replace aging gas [ pipe station ] plants with new and more efficient plants. We also cooperate with our subsidiary to lower emission decarbonization initiative, such as CCS, CCU renewable energy and hydrogen. Our second P is the portfolio transformation. PTT will diversify our business model to be future industry and beyond business such as life science, mobility, lifestyle, AI robotics and digitalization, et cetera. We will allocate our 32% of CapEx investment during 2021 to 2030. We also increased the investment in LNG and renewable energy. For the LNG portfolio, we will increase the production and supply to 9 million tons per annum. And for renewable energy, we will increase the investment to 15 gigawatt. For the last P, is the partnership with nature and society, we will collaborate with government agency to increase the [ addition ] carbon [ sense ] by reforestation and conservation. Let me give you a detail of each P, and I will start with the process of lower emissions. We will reduce the GHG emissions in our operation, as you know, that is 15% within 2030. And we will be doing several initiatives and study such as energy efficiency. We are constructing the new GSP Unit 7 in the replacement of the GSP Unit 1. The new GSP potentially reduced around 112,000 tons of CO2 equivalents per year in the comparison of GSP Unit 1. Besides, PTT will also the use of renewable energy in our production process as well as 30 hydrogen application, and you will hear more detail about hydrogen later today of presentation. Moving on to the carbon capture and utilization. CCU brings the opportunity of adding business value to carbon emissions. By creating new products, currently, PTT has preliminary plan to implement CCU project, namely SODANA and other higher potential projects as well. The SODANA project is a collaboration between gas business unit within PTT and PTT Innovation Institutes and PTT Oil and Retail Corporate Company Limited, or OR. The project used CO2 from gas operation and GSP as a [ reaction ] to produce sodium bicarbonate for industrial customer and domestic and international. Lastly, carbon capture and storage. We started with the offshore our flagship company, the PTTEP is getting up to develop Thailand's first carbon capture and storage or CCS. The project is located at offshore gas [ silo ]. And we also studied about nearshore as well and if you [ prepare ] a white paper and propose to the government, and you will hear more details about CCS in our next presenter. Moving to the second P, which is the portfolio transformation. This is to accelerate the transformation of investment plan and we recognize the urgent need that the climate change and energy transition to a low-carbon economy is very important. So PTT developed this strategy that involves investing in new area of business, such as renewable energy, electric vehicle charging infrastructure and gradually phasing out from fossil fuels business over time. The specific action that PTT is taking part of that portfolio transformation strategy includes exit of coal business in February in 2023 and revisit our renewable energy target by 2030 from 12 gigawatt to 15 gigawatt and also increased the portion of investment in future energy and beyond business. So our investment reached 29% during 2021 to 2023, which is very close to the target. By doing business in future energy, PTT and its subsidiary are investing in renewable energy projects such as solar and wind power to increase their share of low emission and low -- sorry, low carbon energy generation. Developing electric vehicle charging infrastructure and investing in other green transportation solution, such as hydrogen fuel cell technology. And the last one is developing the new business model and partnership to create more sustainable supply chains and reduce emissions across the entire value chain. The last P is the partnership with nature and society. So PTT will increase the amount of carbon dioxide absorption established by nature-based solution to reforestation, progress protection and increase green area. As PTT Group aims to reforest another 2 million rai or around 3.2 billion square meters nationwide by 2030, of which 1 million rai will come from PTT and another 1 million left from our subsidiary. Combined with our existing 1 million rai of forest that PT has done during 1994 to 2021, the forest would absorb more than 4.15 million tons of CO2 equivalents per year. According to our third-party academic research, the forest during 1994 to 2021 with a total area of 1.1 million rai, could create value worth more than THB 280 million per year to the society. For more detail of our new reforestation project, you also will hear from our next speaker. But before that, let me give you a short brief detail of our assisted 1 million rai of forest that we have done during the 3 decades. In 1994, PTT volunteered to run a reforestation project. But before that, let me give you a short brief detail of our assisted 1 million rai forest are that we have done during the 3 decades. In 1994, PTT volunteer to run a reforestation project. In honor of his majesty the late King Bhumibol Adulyadej the Great, on his 50th anniversary of his accession to the throne, the company aimed to restore forest that was earlier encroached and destroyed. The amount of CO2 absorption from our existing 1 million rai forest is recognized by Low Emission Support Scheme or LESS from the Thailand Greenhouse Gas Management Organization or TGO. The assessment found that the project operation during 1994 to 2017, achieved GHG storage of roughly 32.5 million tons of CO2 equivalents. Furthermore, our existing 1 million rai was verified by third-party verifier (sic) [ verification ] and received certificate of guidance of the Carbon Footprint for Organization or CFO. This certificate we received from TGO and the absorption amount is around 0.9 million tons CO2 equivalents. The verification period is start from 1st of January in 2022 to 30th December 2022. In this regard, PTT continue as we maintain and project assets of 1 million rai and we will grow another 1 million rai of new forest. Along the journey of reforestation, we also put an emphasis on building knowledge, educated to [ properly ] restoration of natural resource. We have established 3 learning centers, which are Metro Forest, PTT Wangchan Forest, and Sirinart Rajini Learning Center. The Metro Forest is in the area of 12 rai, founded in 2015 is located in Bangkok close to Suvarnabhumi Airport. The learning center is intended to be the learning center and a green area for Bangkok citizens where there was type of local Bangkok trees can be found. This area got recognition to absorb 36 tons of CO2 equivalents per year. The second learning center is the Wangchan Forest. The learning center is in Rayong province, opened in 2015. The learning center, which has a total area of 358 rai is intended to be a place where knowledge and innovation about various methods of forest restoration are hosted, particularly integrated forest installation method in the form of ecoforestry where perennial plants and horticultural plants as well as [ very few ] are placed side by side. The center is also a pilot reforestation site in T-VER program with the amount of the history removal around 3,758 tons of CO2 equivalents per year. And the last learning center is Sirinart Rajini Ecosystem Learning Center. It's located in Prachuap Khiri Khan province, opened in 2002 and the area is 387 rai of mangrove forest. The area we start from the deserted shrimp farm and into the mangrove ecosystem learning center. Research and knowledge were applied to restart the greatest soil [indiscernible] water. The turning area into a large part of mangrove forest capable for absorbing approximately 41,260 tons of CO2 equivalent per year. To achieve the target of our carbon neutrality by 2040 and Net Zero emissions by 2050, PTT cannot do it by ourselves. In fact, we have to collaborate with other [ Net Zero ] decarbonization network in order to push our own and Thailand target. To enhanced Thailand climate change operation and [ restoration ] on Net Zero emissions, PTT support Ministry of National Resources and Environment to organize the event on Thailand Climate Action Conference or TCAC. We have exchanged our practice and knowledge. Also besides the TCAC, our CEO as a Chairman and among other 622 organization of Thailand Carbon Neutral Network or TCNN, which is a cooperation between government, private and local sector to reduce GHG emissions. In addition, the TGO estimate TCNN in the collaboration with Carbon Neutral Now under the UNFCCC to promote cooperation of our sector in GHG reduction and aiming for Net Zero GHG emissions. Right now, PTT is one of the climate leading organizations and participants in UNFCCC Carbon Neutral Now. This will result other member to enhance the integration level, creating sustainable growth in a low carbon society and to achieve carbon neutrality and Net Zero emissions target together. For collaboration within the group company, PTT has established -- the PTT Group Net Zero task force or you can call it G-Net, comprise the high level executive group company. The task force is responsible for set target and focus on managing key projects, [ aimed as ] significant reduce GHG or enhancing carbon dioxide removal and sequestration. These efforts align with the business context of PTT Group, such as carbon capture and storage or CCS, carbon capture and utilization or CCU, renewable energy, hydrogen energy and reforestation to support each company in Thailand to achieve its own target. And you will hear more details about CCS, hydrogen and reforestation in the next section. So please allow me to hand back the stage to the host, which bring all of us to the next part of the presentation today. Thank you.

Our speaker from PTT Sustainability and Strategy Department team. So for the next session, we will move on to PTT Group decarbonization projects. Let me introduce our first project leaders from CCS. Please welcome Dr. [indiscernible], Manager from Environmental Technology Research Department.

So good afternoon, ladies and gentlemen, from on-site and online. So it's my pleasure to be here for sharing the CCS project. And also, I hope everyone maybe ever listen the word of CCS. So the CCS stand for the carbon capture and storage. Okay. So CCS is one of decarbonization technology for contribution for the Net Zero. So how does it work? So carbon dioxide we remove by -- during the capture and then reinjection into the geological underground, so all maybe it is called subsurface for the permeability, so it means that it will be secured into the underground. So I have a video to make you explain more about the CCS. So we can see here -- this is what is the carbon capture storage. So normally, carbon dioxide from the industrial will be released into the atmosphere. So if we want to capture, so we have a CCS. So we'll capture carbon dioxide and then to transport into the storage site, so the pipeline or maybe ship and then we will have the [ transform ], the injection of carbon dioxide into the underground. So this site is a very secure because of the cap rock and then you can see it is fed in there. So the carbon dioxide will be inside. And then this is the phenomenon. So carbon dioxide will be forwarded to the [ process ] sites and then you can see here the reaction of the carbon dioxide will be turned into the [ solids ], it will be like a solid [ form ]. So you can make sure that from carbon dioxide is changed into solid form, as can we make sure that it is -- not pollutes into the atmosphere. So this is the one of the -- how that is worked for the CCS. So this video explain about this one. So now everyone knows about the CCS but you can see further for the global CCS, you can see, is actually the CCS is not quite new, the technology, but for the Thailand it's new because we don't have the CCS any -- before. And can you see that. Right now, there are 41 CCS facilities that operates in the global. And also we can see the capacity is about 49 million tons per annual for the -- to capture other carbon dioxide and you can see that now we have more than 300 CCS facilities. This new development, including the Thailand also. So in the context of the Thailand, so we can see that. CCS will be increasing to the decarbonization for the Thailand decarbonization plan. So the CCS will be -- the capacity about 40 million tons per annum in the 2050 and then we have a target, it's about 50 million tons per annum for the 2065, that's the Net Zero target for the Thailand. So -- also PTT Group, we have initiated the project about CCS. Firstly, as for the -- the first one is about the offshore project. The offshore project is in -- this is the one of the project that is the first pilot project of CCS in Arthit. And also, we have the second one that we have a collaboration with the PTT Group to develop the Eastern Thailand CCS Hub in the area Eastern in the Chonburi and Rayong. So the objective of the Eastern Thailand CCS Hub Model is, this is for reducing the emission from the most intensive industrial cluster, you can see that this is the industrial sector almost in the Eastern. And also, that this project -- this will be the key backbone of the CCS project in Thailand. And it's the driving force to the global opportunity in the CCS and also the energy transition project as you can see here. So how you can the operate? So they can see from the north of the industrial. So every PTT Group and non-PTT group in that area will be in a capture of this carbon dioxide and then deliver carbon dioxide via pipeline. And we have like a terminal and then it's delivered into the injection. That is the nearshore projects. The distance is about 100-kilometer from the shore and then injection into the storage site. That is the area is called a saline formation. And in terms of the environmental aspect. So CCS environmental monitoring and data platform is studied by PTT Innovation Institute. So the study for the [ core order ], the environmental issue that we have to supporting for the EIA and also for the Monitoring Measurement and Verification or MMV, and also -- so we researched about the cost effective carbon dioxide monitoring technique and also that this part is very important. That is because it's for the supporting the driving for the regulation and policy in Thailand also. So as I mentioned earlier, the CCS project is quite new in Thailand. So you still have the key challenge for developing the CCS project. Firstly, we had to -- like the technical. So you can see that we had to find like CCS storage because right now, we already have like a desktop study. So we need to explore to the potential for the Thailand officially in the Gulf of Thailand. And also in terms of the commercial incentive to -- for the economic viability and the last is very important that is for regulation because we can see that we need to -- comprehensive regulation for developing the CCS value chain. So right now, we have the -- engaging with the stakeholder for the driving of regulation and policy shots like we -- the government to do to this one. Lastly, we can see that CCS also have the benefit for the -- not only for the organization, this is for the country further. As we know, CCS can be contribution for the Net Zero to achieve that one. And also, that is important thing so we have the CBAM. If you have the CCS can be contribution for the CBAM mitigation because you have to export the product into the EU. And also, this process will be faster, lower carbon investments, such as like hydrogen which would be -- to become the blue hydrogen. So it's just like a diving force. And also further the GDP improvement, so if you have the CCS project can be improving the GDP improvement. In terms of the job creation also during the developing the carbon capture and storage project. So this is the last part of the CCS. Thank you very much.

Thank you very much, Dr. [indiscernible] for the informative presentation. So let's move on to the next project. So after we know about the reduction of carbon emission from the CCS, the next step is the transition to a new era of energy sources. And one source that everyone interested in and curious that what PTT going to do is the hydrogen. So please welcome our PT Group Hydrogen Project leaders, Dr. [ Thana Sornchamni ] Manager of New Energy Technology Research Department.

Good afternoon, everyone. It is my pleasure to be here and to share with you about the hydrogen. So today, I have 2 topics that I would like to share with you. The first one is the hydrogen value chain. I just want to make sure that you have the basic understanding about the hydrogen. The next topic we'll talk about the hydrogen activity that PTT is doing at this time. Let me proceed with my presentation. This is the first slide about the hydrogen value chain. I just want you to understand this is important -- maybe the most important of my slides. The hydrogen value chain is really similar to oil and gas. You have the production, you have the transportation and we have the end-use applications. The difference is for hydrogen -- for oil and gas, you can have the reservoir. You can go, export and natural gas and oil [indiscernible] from the oil and gas well. But for hydrogen, you cannot find the hydrogen reservoir. If you want hydrogen, you have to produce it by your own. And probably you heard about the color of hydrogen, gray hydrogen, blue hydrogen a few minutes ago and green hydrogen. The difference is for gray hydrogen, we produce from natural gas to the steam methane reforming process and we emit carbon dioxide. We consider this is the dirty hydrogen. And for the blue hydrogen, it's very similar to the gray hydrogen, except you remove the carbon dioxide and store it underground like through the technology CCS. And the last one, very important, and people talk about it a lot, it's a green hydrogen. Green hydrogen produced from renewable energy and renewable energy and sent to the equipment call electrolyzer that splits water into hydrogen and oxygen. So this is the clean -- truly clean hydrogen, and it's not involved any fossil fuel in the process. And after you get hydrogen, you transport to the customer, maybe use their pipeline tube trailer, and if you want to send from one country to another country, you may consider about using the liquid hydrogen or change to the ammonia and transport as ammonia. And for the end-use application in the downstream at present, PTT used only the gray hydrogen in petrochemicals. And finally, like in Thai, we used gray hydrogen. But in the future, there is a need and [ clean up ] -- clean hydrogen, which is clean and blue hydrogen. In several sectors, for example, heat fuels power and also feedstock, and the one that I want to mention is the mobility. We can see the opportunity to reduce the carbon using hydrogen in mobility sector, commercial vehicle like, FC bus, FC truck and also in maritime application and also in train. So this is the demand of hydrogen. I have to tell you that at this time, over the world, we use hydrogen only 90 million tons per annum but to achieve Net Zero target by 2050, we need 6x more so that means we will use about 500 million to 600 million tons of hydrogen in the near future. China will be the leading of the hydrogen consumption, followed by North America and in Europe. So South Korea and Japan, they will need about 35 million tons of hydrogen to achieve Net Zero and the rest of the world is 235 million. And if you noticed clearly on the back half, so in any sector, you will see that the most use of the hydrogen will fall in the mobility sector in the blue -- navy blue on the chart here. So I would like to tell you that you may expect the use of hydrogen more and more in mobility sector. Hydrogen have challenges, at least 2 challenges that I would like to discuss today. The first one is the transportation of hydrogen. In order to get the same amount achieving in value, you need a lot of volume of hydrogen to produce and hydrogen is a very small molecule that can leak easily. So the transportation will be the challenge. So there are many development on the transportation of hydrogen. For example, you can compress hydrogen 700 bar. You can see that we use in the [Foreign Language] maybe later. And also, you can make liquid hydrogen just like LNG, that you're probably familiar. But the problem is we need to reduce the temperature minus 253 Celsius. And then we can change the hydrogen into hydrogen derivative like ammonia and once you transfer this ammonia to the location where you want to use, you can crack hydrogen back to the -- sorry, crack the ammonia back to hydrogen and use at that location. And the last one is the liquid organic hydrogen carrier. What does mean is you have the organic compound and use big hydrogen on this organic compound and you transfer this organic compound to the user locations and use separate hydrogen from the organic compound at the location of the use. And this from some [ fluid can ] about how to transport hydrogen. If you transport hydrogen less than 300-kilometer, compressed hydrogen may be suitable. But if you transfer hydrogen more than 300 kilometer, you may consider to use liquid hydrogen technique and also for the ammonia for transfer between 2 countries, more than 4,000 kilometers. And second challenge is the price. As you probably know, the clean hydrogen at this time, blue, clean, it's more expensive than currently gray, but we see the trend of reducing of the cost of green hydrogen in the future. [ Battery ], a factor that's coming in to make green hydrogen much less expensive. The first one is the renewal energy will be cheaper in the future. And the second is the CapEx of electrolyzer that I'm talking about at the beginning will be cheaper. And the last one is the efficiency of the electrolyzer will be much better. And all of these [ treating ] will make green hydrogen cheaper in the future and we expect to see some areas, some regions that the green hydrogen will be even cheaper than gray hydrogen by 2030. Well, let's go to PTT activity on hydrogen. I'm really proud to say that PTT is the one who initiated Hydrogen Club Thailand in 2019. Our objective of Hydrogen Club is we want to strengthen the collaboration between a member and we want to do the road map for hydrogen for Thailand and also do the demonstration. And the last thing is we want to enhance the public accepting -- public awareness on the hydrogen technologies. Last year, we got 33 (sic) [ 34 ] new members to join Hydrogen Club Thailand, and we produced hydrogen white paper to support the government in hydrogen policy. And last one is we do the first hydrogen demonstration project. I will talk about it later. And this year, we want to transform our club into the association. And on the right-hand side of this presentation, I show you the member of the Hydrogen Thailand. It composes of the government sector, private sector and also this institute. This is the white paper that Hydrogen Thailand Club and PTT working together and produced for the government. In this white paper, we project the demand of hydrogen and the supply of the hydrogen for decarbonization. And from our analysis, we can see that in order to achieve the Net Zero, hydrogen can contribute the hydrogen to the carbon dioxide reduction up to 16 million tons per annum. And this is what we found in 4 sector on the slide -- on the graph in the middle, in power sector, mobility, heat and also in feedstock. And follow-up from this white paper this year, Hydrogen Thailand Club member, we proposed 9 projects -- pilot projects to the government and it's still in discussion with the government. And if it successfully gets support from the government, by next year, you will see more pilot projects of hydrogen and [ profitability some news ] to project. And this is the progress of the addition for mobility that we opened the first hydrogen filling station in Thailand in November 2022. We used the to Toyota Mirai to [ U-Tapao Airport ] limousine. At this time, I bought up the FCEV, it ran about 10,000 kilometer per month. And from last year until -- from the beginning of last year to the end of last year, we consumed hydrogen about 14,000 (sic) [ 1,400 ] kilogram. And with only 2 car, we reduced carbon dioxide about 24 tons. So this is all of my presentation and short presentation about hydrogen. Thank you very much.

Thank you very much, [ Dr. Thana ]. So apart from CCS and hydrogen, PTT Group also focus on enhancing the growing area for Thai people in order to increase the amount of carbon absorption by nature. So one of our parent project that we have done from time to time is the reforestation. So please welcome, [indiscernible], the project leaders from sustainable reforestation team.

Good afternoon, respectable guests and dear colleagues. I am [indiscernible] representing PTT Reforestation and Ecology Institute. And today, I'm going to share about PTT sustainable reforestation. So as [indiscernible] has already mentioned, since 1994, PTT has been carrying out reforestation projects across Thailand, covering various types of forests. This provided us experience and knowledge toward successful reforestation, a timely assessment of the academic research of these reforested areas is performed every 5 years by the Forestry Research Center of Kasetsart University, which is a third party. Apart from these studies, these areas were also found to have a fertility rate of over 83% with increased biodiversity and complete restoration of the ecosystem. Last year, PTT, along with other companies in the PTT Group signed an MOU with the Department of National Parks, Wildlife, and Plant Conservation, The Royal Forestry Department and the Department of Marine and Coastal Resources for sustainable reforestation of another 2 million rai. From our experience, we have learned that reforestation would not be successful if the community was not involved, as they play a major role in sustaining the forest. Hence, it is important to enable the community to earn from reforestation along with educating them on how to look after this forest while they can generate income for their families. So keeping that in mind, we work to balance and ensure the best interest of the forests and all parties involved. The PTT Sustainable Reforestation Unit consists of 3 main divisions that work synergistically. First is the team for networking and public relations, which encourage formation of community enterprise, create and maintain close relations with the communities surrounding the plantation plots as well as organizing trainings to educate the community on sustainable reforestation and collaborating with the governments and funding agencies to support reforestation activities by [ currency ] enterprises. Secondly, we have teams for forest planting and maintenance who file request documents to government departments and closely collaborate with the government offices. The team also perform field survey and selection of plantation plots as well as procurements for funding and maintenance of the selected areas. Thirdly, we have the teams that collaborate with consultants and the verification and validation body, registered the plantation plots for the Thailand Voluntary Emission Reduction Program or T-VER and T-VER Premium. Then proceed for carbon credit accreditation, along with research and development for innovative solutions in terms of sustainable reforestation. Here is a process overview of the project. We began with plots allocation and selection. Then we involve the community by engaging with public hearing and hire them for seedling cultivation, planting and maintenance works. While plantation of each plot takes place within the first year, while we also registered for T-VER accordingly. During the second to tenth year, the process of inspection and maintenance is carried out, with -- which include weeding, repairing all firebreak paths, investigating survival rates, replanting to replace the dead trees, repairing the signboards as well as fire surveillance. During this period, we also administrate for T-VER accreditation and finally, at the end of the tenth year, we shall deliver the plots to the authority to continue the maintenance work. Please note that we comply with concerning rules and regulations while working closely with the officers from the respective authority, along with the community throughout every process. And here are some photographs of our activities in Northern Thailand in our plantation plots in Phayao, Mae Hong Son, Chiang Mai, and Phrae. You can see that PTT demonstrates strong commitment to the community by hiring them for reforestation, which in turn provides a sustainable maintenance of the forest. These were the activities carried out in northeastern Thailand in Nakhon Ratchasima and Khon Kaen. As we're all aware that each plantation plot may be of different types of forests containing difference biodiversity and ecosystem, we work closely with the government offices and academic professors in forestry to identify the type of forest and planting native species in each plot to ensure natural restoration of the forest and the respective ecosystem. And these were activities in Western Thailand in Kanchanaburi, which regards to internal control, we have field staff who perform field survey and follow up each activity in every plantation plot as well as removing the process and performance. Meanwhile, we also inspect the plantation using remote sensing technologies such as drone and satellite images, random sampling of the plots to investigate the survival rate, the species count and planting density. Moreover, registration and accreditation of T-VER, carbon credit involved the validation and verification body who is a third party. Lastly, we believe in the underlying philosophy from the speech of His Majesty, late king, King Bhumibol Adulyadej, that trees should be planted first in the hearts of the people, then the people will plant trees on the land and nurture them. [ His Most High ] was involved raising awareness, valuing natural resources and the environment and creating values for the community so that everybody can propagate the mission to create a cleaner, greener and better world. Thank you very much for your kind attention, and we are glad to answer all your questions.

Thank you, Khun [indiscernible] and all speakers for the valued information today. So now we move on to the Q&A session. Any questions from the floor, please feel free to raise your hand, and I will stop to bring you the microphone. Any questions? And from the online platform. If you have any questions, please drop your question in the chat box, and we'll start to collect and address. So now we have a question from our online. The first question is can you comment on PTEP operator of the gas field taking on [indiscernible] now going to 62.96%, in context of human rights policy just mentioned? Okay. And the further question, PT undertook a human right due diligence process in 2023, but didn't include its impact on human rights in Myanmar, why not? Okay. And the further question, PTT undertook the human rights due to the same process in 2023, but didn't include its impact on human rights in Myanmar. Why not?

Okay. Thank you very much for bringing the human rights topic into our Q&A session. It's a very important topic that we are really concerned of. As you may understand, the situation in Myanmar, and right now, we can see from the news and as well as situation on, like Twitter or on the Facebook that is really that it comes out with [indiscernible], right? And the [indiscernible] displaced person who flee from Myanmar into the Thailand is underscoring the urgent needs for the humanitarian aide and support. And we do have the support. Those people, according to international humanitarian law at Thai states, are rectified with. And so for this situation, I, PTT, we really want to urge all the parties to now [ calmly ] take this urgent towards the mitigation in this impact of the conflict on the people of Myanmar, including creating a safe and conducive environment to ensure that it's timely and safely for all those people in terms of humanitarian assistance, without any discrimination that we believe. And also, we continue to monitoring our entirety, especially the PTTEP in -- on the dynamic situation to make sure that our subsidiaries, we work every activities to fully concern on this matter at the law that defined. And also, as you may see from the presentation, now PTT remains committed to achieve the Net Zero emissions. Recognizing the road and as a leader in this regional, we extend our perspectives, we also see our prosperity to promote the peace and sustainability. We do believe in active engagement in regional initiatives and addressing the Myanmar crisis in harmony with ASEAN 5-point consensus, which is [ noninterferial ]. And we would like to continue in both regional sustainability and unity while advancing our sustainability objective. And last, we wish the situation in Myanmar will be resolved soon and they return to normal for the prosperity of Myanmar and people of Myanmar. Thank you.

So the next question. Okay, the question from the floor.

Well, firstly, thank you for the presentation. You talked about your sustainability road map to 2030 with a 15% reduction in greenhouse gases emissions. So I was wondering if you could help me understand this a little bit better by kind of framing it as a -- the proportion of revenue that you expect in 2030 to come from renewable activities.

Okay. In terms of revenue, as we also have a new vision, future energy and beyond. So we expect that future energy and beyond this net will contribute around 30% by year 2030. So for the future energy number, we forecast on 4 areas, which is [ new growth, reforestation ] as well as hydrogen. And for beyond energy, will be rights and high-value business, AI robotic infrastructure and also [ multilifestyle ].

I see. And for my second question, you talked about how your capital expenditures in 2021 to '23, about 29% of it was to renewable activities. So I was wondering, looking forward, your yearly budget for investments in sustainable activity. Could you kind of talk about that compared to your investments in fossil fuel related?

I'll show you for until 2030 for PTT Group, we said that CapEx to investment in this future energy and beyond, it's going to be around 32%, the last 68%, we investment in our core asset in gas, [ very ] emphasized on the gas assets because we believe that gas is a good energy transition to become more cleaner and greener.

And if it's okay, if I ask one more question about CCS. I was -- so from my understanding, and correct me if I'm wrong. It seems like -- the -- in terms of the engineering front, you have the capabilities with the pilot project and everything with doing CCS, but you're lacking the structural financial incentives. So I was wondering what form do you see that -- what financial incentive is necessary for this to be feasible? And where do you expect that to come from?

Okay. Thank you for your question. That's a good point for the CCS project. Because as I mentioned earlier, for the key challenge, the key challenge of CCS is the part of their incentive is to develop the project to economic viability. So this is the one that we tried to approach and also for the -- in terms of the regulation also, this is one of the key factors because this is new for Thailand. And right now, we try to PTT Group, and we try to approach to further like government and also to be the -- try to -- that is the early state. So we try to understand the project and to study the project, like the project cost now is under study. So after this, after we started, we know about the cost for the project, the whole valuation, including the -- like transportation into the storage and also further developing project because the CCS -- the investment cost is quite high. So the incentive is quite important to driving the project.

Okay. I see. So you're expecting it mainly from the government?

Yes. And also, we have another choice like maybe we can open like investors, I think that is -- and is now under study further like economic module.

This is [ Ping Sung ] from JPMorgan. I have 2 questions actually. First, regarding reforestation. So I understand from the presentation is that from the first to the tenth year, you have the T-VER accreditations, right, and all that. And after that, it was sent to the authority to monitor and on this. So the first question is will carbon absorption be included in the greenhouse intensity after the 11th year? Because I can see here is the first 10th year. And if it has to be included in greenhouse intensity reduction, how can we ensure the monitor and continually to do so? Because I understand that there's a perfect inspection and maintenance for the first 10th year, but we want to understand, as we go down the road to 2050, 2060, how can that be done?

Thank you for your question. So regarding the carbon credit. So according to the MOU that we signed with the government agencies, that's for 10 years. So the project timing is for this 10-year. So we are going to do the accreditation for the carbon credit for twice in these 10 years, one is on the fifth year and then mostly on the ninth year so that we can use this amount of the carbon credit on the tenth year. And then after that, we are actually having thoughts of about extending the project, talking about -- with the government agencies like how can we extend our projects so that we can continue to maintain this forest further? So that's actually our plan in mind, yes.

My second question is regarding to the CCS. So -- thank you so much for the previous response on the government support. But I think from the presentation, there's also another part on 2030 that there has to be an international support. So the first thing that I would like to ask is what kind of international support are you looking for? And second, if there is no international support, PTT requires with 6 to 10 MPTA that you are targeting, would that be able to be reached and how that impacts with the entire project on the CCS project?

That is the one that, as I mentioned earlier. So in international support, it's not only the financial, it's maybe some other technology and also because in the far future, we have the shipper technology also can be application. And also because right now, the cost will grow every year for the CCS technology. So we have to think about, okay, some of the financial from the abroad, like U.S. or maybe any other investor or maybe -- it's not only for the PTT Group, maybe we have in the economy like business, hopefully, we can be like an intention of further trying, not only PTT Group, maybe non-PTT group can be joined project together or something like that. Because it's just like, as I mentioned, it's a backbone of the national. Maybe it's -- maybe you have to think about this for the financial investment, this is the [ under year 1 ] project.

And my last question, I'm not too sure which person would be able to answer this, but I was just wondering like the entire sustainability project, especially on climate action, it's also to reduce the greenhouse emissions, right? And I understand that PTT has already announced with Scope 1 and Scope 2, but we would like to understand as we go along further down the road and as well as the European oil and gas, some companies starting to announce some Scope 3 targets, not too sure whether -- what are the directions or strategies on PTT with the Scope 3 target?

Thank you for the question. So for Scope 3, we have already collected data. for several years on some categories like employee travel and use of sold products, which is the most significant category for us. But for other categories, we are still under study because of the overlapping between us and our subsidiaries throughout the supply chain. So yes, we're still under study for that and still waiting for the clarity of the science-based target in case that they have proper methodology for us, oil and gas. But yes, in the future, we aim to include Scope 3 into our target setting.

Okay. So we have questions from online. The question is many of the existing CCS operation globally simply enhance oil recovery. Are you proposing to use it to enhance oil, gas production? Or is your project simply a CCS project? What are the costs for CCS? Is PTT receiving government subsidiary for doing this? Also on a technical note, should see carbon dioxide mineralized into the bedrock, how can be sure of the potential storage of the [indiscernible], especially if the carbon dioxide mineralized close to the injection point, thereby signaling future gas route.

Okay, question by question, okay? Firstly, from the project from the PTT Group project, the first one is the first pilot CCS project in Arthit, the offshore project. So it would be like a storage into the [ depleted reservoir ] and also for [indiscernible] officially for the CCS hub, in terms of the capacity, of the storage. So the storage size further in the [ video ] of the saline aquifer is more -- in terms of the [ in house ] study. So is that further -- so it means that this project will be -- if not for the enhanced oil recovery. This will be the CCS injection alone into the saline aquifer, to [ install it ] the carbon dioxide only in -- for the decarbonization, the way technology that are the one as I answer. And what is the second one?

It's for treating carbon dioxide mineralized.

In terms of mineralization, it's not the -- when we inject the carbon dioxide into the storage side, it's not quickly to turn into the action into the solid fit, mineralization. We have that [ time ]. So it means that it's not brought at the same time in the injection. So you have from time to time, it will really return into the reaction into the rock. It's not immediately to change that. So for sure that is not talking, they're doing the injection. So this fill into the [ porous site ] of the rock is not after the injection, this will changes in it immediately, it's not -- so it means that as far -- as I mentioned in the very formal information, that [ issue ] is that [indiscernible] that -- our first carbon dioxide chain mineralization into the rock. So it means that it's not released into the atmosphere. So that's the reason why I would like to answer this one, yes.

So any questions from the floor? Okay. We have one more question for online. The hydrogen, how much is dependent on government financial support?

I probably answer quickly on this question. The answer is just all the hydrogen project at this time heavily rely on government support, not only for financial, but regulation unlock as well. So financial and regulation unlock. For example, green hydrogen, to produce green hydrogen sometimes when we produce the Lenovo energy, it's one location, but the use of the hydrogen is another location. We need support from the government like TPA, third-party access to time for the electricity from one phase to another phase. And I just want to mention that the night project that I mentioned [indiscernible] project. It's also needs financial support from the government subsidy or I think that to move this project ahead. And to be clear, I just want you to think about how other [ green ] energy like solar and wind happened in the last 10 years. They all need subsidy from the government like at the beginning. And even EV car today, you got the subsidy from the government, EV -- right now it's [ EVT 3.5 ] or something like that. So the government will support this and I hope that for hydrogen, government will take a look seriously and then support this.

Thank you very much, [ Khun Thana ] and that will be the last question. The session has come to an end. I would like to thank you all for joining the session today. And for our further improvement for the activities, please evaluate our today's session. And if you have any questions after the session, please feel free to contact PTT IR team. I hope you have our information for today, and see you next time. Thank you very much. [Foreign Language]