State-controlled PTT also plans to pump $400 million to double the capacity of the country’s first LNG terminal to 10 million tons.

The company was in talks with several suppliers on pricing of the fuel and planned to import 2.5 million tons after the middle of 2012 to 2014, Wichai Pornkeratiwat, senior executive vice-president for its gas business, said.

“When things change, we can cancel that. What we signed was just an MOU,” Wichai said referring to a memorandum of understanding PTT inked with Qatar in 2008 to buy 1 million tons of LNG a year from late 2011 to feed the LNG receiving terminal, also the first in Southeast Asia.

PTT officials declined to give details about its suppliers.

Rising LNG demand in the wake of the March 11 earthquake in Japan has pushed up LNG prices in recent months to more than $16 per million British thermal unit (mmBtu), up from $7-8 mmBtu, during the pre-quake period, PTT CFO Tevin Vongvanich said.   

“It’s the sellers’ market now after prices surged as a result of the nuclear crisis in Japan,” Tevin said, referring to the aftermath of the quake and tsunami, which also crippled the country’s nuclear power plants and triggered a huge radiation leak.

Late last month, Qatargas said it will shut three of its 7.8 million ton-per-year (tpy) LNG plants in rolling maintenance planned for autumn, leading to the biggest rise in UK gas contracts since Japan’s Fukushima nuclear crisis began on growing winter fuel fears among European buyers.

And on Tuesday, sister firm Rasgas said it will shut down one of the world’s biggest LNG production units for maintenance in January, at a time of mid-winter peak demand for most large gas consuming countries.

Analysts said the move to scrap the deal could be a handicap for PTT if potential suppliers view the Thai firm as setting a precedent of going back on initial purchase agreements at a time of strong competing demand for LNG from Northeast Asia. Japanese demand in 2010 was at 70 million tons and is seen rising 12 percent this year.

But others said PTT appears to have already replaced the volumes lost from the Qatari deal, adding that the cancelation of an MOU would unlikely to have a big market impact.

Tri-Zen International analyst Tony Regan said that PTT appears to be pursuing a strategy that allows it to forge short-term contracts as and when it needs supplies.

But such a move could be risky in a tightening global LNG market in the next few years and as prices rise, PTT could be stuck with buying more costly cargoes in the long run, Regan added.

On Wednesday, PTT officially opened the 5 million ton a year LNG terminal at the Map Ta Phut industrial estate in the eastern province of Rayong.

The $880 million terminal consists of one jetty and two storage tanks that together can handle up to 5 million tons per year (tpy) of LNG, the amount Thailand plans to gradually import after 2011. LNG, gas chilled to liquid form for sea transport, is a key fuel source in Thailand, which uses natural gas to generate about 70 percent of its electricity.

The terminal is capable of being developed into an LNG commercial hub for Southeast Asia, which would further enhance Thailand’s energy security, PTT said.

Chief Executive Prasert Bunsumpun said PTT planned to expand the capacity of the LNG terminal to 10 million tons, expecting construction to be completed in 2016 with an estimated investment of $400 million. 

“We are discussing with the Energy Ministry about the expansion. If it approves the plan, we will start the project immediately,” Prasert said. Shares of PTT rose 1.6 percent on Wednesday, compared with the main index’s 1.2 percent rise. 

Thailand is among a growing number of new LNG buyers in Asia as imports of the cleaner-burning fuel allow countries to diversify away from oil and coal.  

Singapore, Indonesia, Malaysia, Pakistan, Bangladesh, Vietnam and possibly Sri Lanka and the Philippines are expected to become LNG importers in the next few years, adding to rapidly growing Asian demand for the super cooled fuel.  

Malaysia is building a 3.8 million-tpy LNG terminal in western Malacca state, due for completion in mid-2012, and is looking at building another in southern Johor state. The country has also struck an LNG import deal with Qatar for 1.5 million tpy from 2013.

Singapore, which aims to become a business center for LNG, is expected to launch a 6 million-tpy terminal in early 2013.