Bangchak Group monitors energy prices amid global recession concerns

Energy giant Bangchak Group of Thailand is keeping a close eye on energy prices for the second quarter of this year, amid concerns of an impending global recession. The company reported a 16% increase in revenue in the first quarter.

Chaiwat Kovavisarach, the group CEO and president of Bangchak Corporation Plc, expressed that crude oil prices are likely to remain under pressure due to fears that the global economy may be headed towards a recession, particularly in the European region.

Inflation-induced central bank interest rate hikes, as pointed out by the World Bank last year, may cause a worldwide recession by 2023.

Notwithstanding the bleak economic outlook, an increase in crude oil prices has been driven by growing concerns about tightening supply, following a decision by OPEC and its allies to reduce oil production, explained Chaiwat.

He added that the company is closely monitoring global economic shifts, as they could have a profound impact on oil consumption.

Chaiwat confirmed that Bangchak will continue to focus on growth promotion while maintaining energy security for the nation.

In the first quarter, Bangchak reported revenues of 80.3 billion baht, reflecting a 16% growth compared to the same period in the previous year. The positive sales performance of Norway-based Okea ASA, an oil and gas drilling company, contributed to this increase.

In 2018, Bangchak acquired a 45.7% stake in Okea, a company publicly traded on the Oslo Stock Exchange. Following its takeover of Shell’s Draugen oil field in 2018, Okea continues to develop new areas.

Chaiwat reported that Okea’s sales volume rose by more than 100% quarter-on-quarter due to two lifting cargoes from the Draugen field, as well as full-quarter revenue recognition from the Brage field, acquired from Wintershall Dea.

However, Chaiwat mentioned that Bangchak’s total revenue in Q1 this year saw a 5% decline as compared to the fourth quarter of 2022.

In terms of the power business, the company’s earnings before taxes, interest, depreciation, and amortisation decreased by 15% from the final quarter of last year to 852 million baht. This can be attributed to Bangchak’s hydroelectric power plants in Laos temporarily ceasing electricity production in the first quarter to prepare for the sale of electricity to Vietnam Electricity, reports Bangkok Post.