UPDATE 1-Thai PTT plans to sell palm oil business in Indonesia

Wed Sep 11, 2013 4:44am EDT

* Plans to sell non-core assets after investment cutback

* PTT lacks expertise in palm oil plantations

* Deal likely to draw interest from Wilmar, Sime Darby (Add details on industry, past investments, budget figures)

By Khettiya Jittapong and Pisit Changplayngam

BANGKOK, Sept 11 (Reuters) - Thailand's largest energy firm, PTT Pcl, plans to sell its palm oil business in Indonesia worth an estimated $300-400 million as part of moves to divest non-core businesses, a senior company official said on Wednesday.

State-controlled PTT is one of several Thai companies that expanded aggressively in recent years, but which have since scaled back investments because of a slump in Southeast Asian exports in recent months. PTT slashed this year's budget by 46 percent and most of its cutbacks involved planned foreign investments.

Charoen Pokphand Foods Pcl, Thailand's largest meat and animal feed producer, also cut its five-year investment budget by a third, while Thai Union Frozen Products Pcl , the world's largest canned tuna marker, cut investment this year by 17 percent.

"We are in the process of selling palm plantations in Indonesia," the PTT official, who declined to be named, told Reuters. "It's a business that needs a lot of attention and is more suitable for locals, while PTT does not have much background in palm plantations," he said.

The deal is likely to attract interest from planters such as Singapore's Wilmar International Ltd and Malaysia's Sime Darby Bhd, a source familiar with the deal told Reuters.

PTT, the third-biggest listed oil and gas firm by market value in the Asia-Pacific region, bought stakes in palm oil plantations and processing operations in West Kalimantan in 2008 as part of a plan to expand into green energy businesses.

It set up a wholly-owned unit PTT Green Energy Pte Ltd to buy a 95 percent stake in PT Mitra Aneka Rezeki for $14.7 million in February 2008. The Indonesian firm has licences to run about 14,000 hectares palm oil plantations in west of Kalimantan Island.

In April 2008, PTT bought a 95 percent stake in PT Az Zhara, which owns licences to operate about 40,500 hectares of palm oil plantations and processing facilities in the central Kalimantan Island.

The Thai energy giant also has interest in coal businesses in Indonesia. It withdrew from an investment in Egypt in 2011.

Through its 66 percent-owned PTT Exploration and Production Pcl, PTT has interests in oil and gas assets in Southeast Asia, Australia, Algeria, Canada and Mozambique.

At 0800 GMT, PTT shares were down 1.5 percent, underperforming a 0.3 percent drop of the broad market.

($1 = 32.14 baht)

(Additional reporting by Saeed Ahzar and Anshuman Daga in SINGAPORE; Editing by Matt Driskill)

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