While we are coming back to our session two. We have our Chief Executive Officer with us, Dr. Kongkrapan Intarajang, the CEO and President. Pattaralada Sa-Ngasang, the CFO. May I introduce, Khun Bandhit Thamprajamchit, the COO, Upstream Petroleum and Gas Business Group. Khun Prasong Intaranongpai, COO, Downstream Petroleum Business Group. Dr. Buranin Rattanasombat, the CNBO, Chief New Business and Infrastructure Officer. For now, may I ask Dr. Kongkrapan, the CEO and the President, to give us a report on the performance.
Good morning. Good morning. All the analysts. This is the performance operation in Q1 2026. May I start now? First of all, I would like to portray the global energy market as we have the crisis for about two months already. We see that we would go through the recap and what PTT have done for the past months.
We all know that there are a lot happening recently. I'm not going to get into that. With the problems arising, people have the questions. What about the price of the oil? What would be happening for sure is about the impact on the world economics, because wealth of each country was spent. I think we have some technicalities with the sound, so please hang on a moment.
Hello, hello. Okay.
Wealth in this world still there, some echoing. Can we adjust, do anything? The money was burned with rising prices of energy. Actually, this money can be saved for economic development. That's the first concern. That would slow down the economic growth of the world. Second of all, when we had war, there was a destruction of the refineries. It took time to recover, at least half a year, a year. Contractors, they have the capability, which is quite limited. The price is getting up. What is missing is the supply in a world market like crude oil. That's about 8% refinery cut run in the Middle East for sure, and in Asia. Many refineries in Asia have to cut its run because of the shortage of the feedstock. For PTT, we strive and we can get along.
I will share with you about the details later on. With the cut run of the refinery, diesel, jet, naphtha is missing. We see reducing number of the export. LNG is cut by 20%, that is quite significant. Down below, we have seen higher crude oil price, Dubai crude premium. Well, there is crude premium for sure. We have the light crude and other kind of crude. There is crude premium, but the premium is getting higher with the shortage of the products. Each country use their strategic reserve. They change the route from Hormuz to the Red Sea. This is all we know. For the refined products, gasoline, diesel, jet oil. When one refinery in the Middle East cut its run, they cannot export the products.
There are shortages of products, and for the refineries in Asia who rely on the feedstock from the Middle East, they have to cut their run and have lower amounts of finished products. Countries export less, the price is getting up, like diesel price surge. With the mentality of people towards the shortage, it hikes up the prices of the products. Gas price and LNG prices, it's getting up, and gas, it has its own lag time despite more export from the U.S. Qatar, it took them several years to recover. The most stable with the U.S. Henry Hub, there is some stock, and they can keep their stability. Supply is getting more. Pre-war, we say LNG would be surplus in the next few years with a lot of capacity and a lot of refineries. With disruption, there's temporary shortage, everyone trying to adapt.
China use their coal to run refineries. Dynamics in the world on crude oil, gas, petrochemical, the dynamics was changing. We have to understand that the fundamental is that crude oil was on a surplus, but now it is not anymore. Gas and LNG, it was the surplus, but now the situation is changing. For petchem in China, petchem plant, they have to cut their run because of the shortage of the feedstock. We have to look into how fast they can recover. Now for PTT, it's our mission. We focus on our core business. Our mission is three things: energy security at affordable price and on a sustainable basis. Right now, our priority is on security of energy. On the dashboard, at first, we would focus on oil and gas, and petchem would be followed.
I will show you how PTT cope with crisis. We established our center since day one, and then we can trigger our mechanics once the situation happens a few days after that. We need the infrastructure and investment prior. We have the trading offices 10 years prior, so we can keep ourself in the market. Once we need the stock, we can get it right away, but this is with the pre-investment. For the refineries in PTT, we keep investing in these refineries like THB hundreds of billion. We can run our refineries more than 100% for two months. This shows a good foundation. Also, we claim flexibility. We can switch our source of fuel right away. We invested in our infrastructure to ensure our flexibility on productivity and resourcing. With the refinery, we have all of the products, so we just adjust our production.
The crude, now we relied on the Middle East less from 60% to 30%, it's more stable for us. When the stock and the ship was halted in Hormuz, we are quite happy because we chose differently. Like we bought the crude a few months earlier, we paid the money, we have to receive the stock, we could not. In the first few months, we just opted to America, West Africa, we know that once Hormuz was open, the price would be down. We took some losses, THB 500 million, THB 1 billion. Now we have to cut down on our refinery and the reserve. This is the risk management strategies of PTT, it comes with cost, we try to manage the best.
For the refineries for the past two months and in the last few weeks, we operated at full capacity or sometimes more than 100%. The consequences is that for PTTCHEM, we run our plants at full capacity because this is the supply chain and the selling point of PTTCHEM plants is that it is the security of supply. In order to import, we have to make sure that domestics have enough supply. When we integrate our chain, PTTCHEM, we have been able to cut down on the risk. For gas, we can manage well. We can take more from the U.S. gas, and we increase the domestic gas from the Gulf, the Thai Gulf, and we split the share of stock with JDA using our relationship we have with our partners, and we also ensure liquidity readiness because crude price is higher.
The margin calls, if we don't lift, then we have to make sure that we have margin calls enough. Liquidity is increased by about THB 200 billion. The most important is transparency. Since day one, we ensure that in the supply chain of oil, how much inventory, how much is the production, and how much is the release from the stock from us, from OR. You see the clear destination and origin. Out of our control, we cannot monitor. In our PTT Group, we ensure the transparency. We also established the working group to look after and to ensure the transparency in PTT Group.
In order to get flexibility, reliability to ensure 100% run, everything has its cost, and we have consistently invested over years. This is about sourcing procurement. We have diverse trading sources. Each day we trade 1.8 MMbbl beyond our own need.
We have liquidity movement constantly, chartering more than 700 vessels per year. We have multiple partners. The fact that we are in the market allow us the ability to source. We never have shortage, and things are available in the market, or sometimes we have to source from outside if we cannot get stock in the Gulf. Ouch. Red Sea, for example, but again, premiums differ outside of Gulf for a while, for a time. +$20 premium for a non-Gulf supply. Right. We make available these slides after today's session. On the PTTCHEM front, for a time, lots of question about shortages. Thailand imports up to 30% of plastic resins. Domestic capacity, we export 40%. Overall, we have no problem with low-dense, high-dense commodity rates. There might be some shortfalls of special grades. Overall, we are good.
Similar to oil initially, there could be speculation, intermediaries, in the end, no shortage except some specialty products. I've been asked. In the last couple of years, we made laws, but still we run fully as we have supply obligations. This slide shows LNG story domestically. Gulf of Thailand supply accounts for more than half and from the joint development with Malaysia and Myanmar. We have security of gas supply. LNG imports. There's PTT and other licensed shippers. Now, stakeholder communication during energy crisis with government agencies internally, partners, and suppliers. We basically reassure them that there's no shortage. We will make sure there is supply. We must communicate facts, our role. Including public communications, just so people understand facts and get hold of facts. That's the big picture. I think you are familiar with that as context. Performance highlight.
CFO will explain better, but a couple of more pages. Given context on the left. Disruption crude and therefore government interventions around the world, not only Thailand. Still, we have done well in Q1. Our net income is THB 25 billion, of which THB 3 billion are from internal projects that we will show you later, the various initiatives that we gain. Without these, net income would be THB 22 billion. Main attribute would be E&P, but PTTCHEM's margin improved in the face of supply shortfalls, and GRM was healthy as well in the first quarter. We managed to maintain credit ratings. I presented PTT in actions for shareholders, investors, our role as state enterprise and listed company, how we equalize our role as listed company and state enterprise. We paid dividend, we paid special dividend, THB 20 some, and shareholders approved our five-year funding plan.
Comparing with peers, PTT improved by 10%. Global major oils, the E&P have shrunk. As E&P by nature has lag time, particularly gas, four to six months lag time. Mostly unrealized hedging losses on paper. No one in the world last year was able to predict oil prices and hence hedging losses. We reckon it will improve in subsequent quarters. Refineries for Thaio il. Refining business alone, their margins are about $4-$5 /bbl or 90 satang per liter . Refining alone. Were minus aromatic stock gains and others. Retail down. There's a story about hedging. Stock loss basically. PTTCHEM improved across the board according to cyclical improvements. A lot of questions about refinery. This is in Thai oil's MD&A. First thing first, spreads. Weighted average of all products.
Minus feedstock Dubai, minus crude premium, 20x more expensive freight and insurance, utility and fuel, depreciation, tax, and et cetera. NOPAT is THB 4.5 billion That's refining business alone, net profit of 90 satang per liter . Thai oil also benefits from stock gains in first quarter, plus bond buyback and healthy margins for aromatics. We were a little bit preemptive that Q1 performance crude premium would concentrate in March. January, February, pre-war normal rate. Intensify in April, May. Because of procurement one to two months ahead of refining time, as well as government intervention on discount of ex refinery price THB 2.3 billion The impact is THB 6.5 billion. PTT Group, the whole group, we know about the spike in Dubai price. Petchems improved. Lower part, two graphs in comparison year-over-year. Increase of 10%, of which profit enhancement account for THB 3 billion.
Businesses, petchems, refineries, stock gains account significantly, margins improve. Some hedging losses in Q1 as well. E&P. Global trend of unrealized hedging loss reflected here. Better sales price, so things will improve. Retails, unrealized hedging loss. Gas is good. Lower selling price, but unit cost lower. Trading actually, there are gains offset by unrealized hedging loss. Impairment as a result of business consolidation. FX derivatives, tax. Auto to the right, CFO will elaborate. Allow me to update our group strategy for about five minutes. The green parts are updated. Upper right. Many ask how we revise our strategy in the aftermath of war. We continue, but some aspects we speed up, the green part, LNG. We talk for two years that LNG is important. We have to secure 10 million tonnes in our port. We must accelerate. Asset monetization, we must revisit.
In light of changed landscape of the industry, we have to revisit, review our plan. LNG aspiration to the left. Qatar's supply, 20% is affected. It will come back. We have to monitor recovery of Qatar. For sure, price will go up. Implications to PTT Group. We want to build supply nodes. Competitive LNG. We want to supply demand nodes in Asia, North Asia, Europe. We have to diversify LNG supply. Initially, there would be more Middle East portion, we have to increase sourcing from U.S. and other regions. We have to strengthen LNG portfolio. Amidst volatility, we have to step up LNG so that we can capitalize on LNG in the face of volatility. For example, we have to speed up sourcing of LNG in our port. Targets remain the same, 10 million tonnes per annum by 2030.
The flexibility is diversification of sources, Henry Hub, Brent, LNG, JKM, et cetera. Again, you all will ask, Genesis partners. Dialog has been progressing well. Crude supply picture in the world has been upended. Crude with high premiums. Well, premiums have changed. People are happy to pay off Gulf crude premiums. What does that mean? We have to revisit optimization. Talking with partners, we reassess the path forward, and we have to take into account various government interventions. Additionally, SCGC partnership, we already disclosed, and we had analyst call this morning. PTT as shareholder of GC, we are positive towards this move because in principle, industry consolidation for oversupply industry is always good, and they have to work on synergy in light of market context. Because plastics have market pricing mechanism.
The brief we have is for them to convince the market how the partnership with stronger partners will benefit the market, how this will benefit domestic supply and supply chain. On asset monetization on PTT Tank. Progress continue. We have TOP Infra. Two different formats of TOP and GC, , sale lease back. What do we want? First, more synergy in operations and continued security and increased liquidity. PTT gets the return and importantly, we finish leveraging, so better ROE. PTT Tank shares already transferred completion in February. Now this dashboard P1 in group synergy on import-export target. We already met target in first Q. D1 on track. Q1 domestic we get THB 765. Mission X, people ask me why numbers are high. That's another conversation for later. LNG stepping up Genesis.
I will talk a little bit about CCS, as many of you asked how fossil has played a more prominent role after war. This emphasizes the importance of CCS. With more fossil fuels, we live with it for 20 years. At the same time, transition will last longer, accentuating the need. The more fossil we use, the more we have to speed up reduction of carbon. Other programs, cash generation, A1, F1 as planned. I think that's all from me. I will give the floor to the CFO.
CEO just m entioned about what is going around us. Coming to the performance, I'm going to go so quick because I guess you already read through the document. I'm going to focus on the key highlights. Going to the first page. Today, we have the COO of Upstream and Downstream. To the left, the revenue, the blue and the purple one is expanding. Normally, it's E&P and gas the most, trading and P&R. If you look at the EBITDA, you'll see that the purple one, the P&R, is greater. It accounts for 45%. We focus on our EBITDA, the profit which is cash on hand. I would like to adjust the figures a little bit, is the EBITDA of MIS, hedging loss and stock gain included. When we get the stock gain, it's because of the closing of the Strait of Hormuz.
We never imagined that the price of crude would be over $100 and diesel spread would be over $100. Our businesses, refineries and PTT trading, they don't want volatility. In order to achieve our business plan, we need to do the hedging as allowed. Once there is unexpected or unusual price, we got the stock gain and hedging loss. We can see clearly that EBITDA is increasing year-over-year and quarter-over-quarter about 23% and 49%. It reflects large spread. Looking at the net income, it is not so high. It's 1% and 10% quarter-over-quarter and year-over-year. It reflects the cost of our operation. Variable might not be following up, we also have the fixed cost, like interest expenses or the operation expenses that ended at THB 25.7 billion. The big portion is E&P and P&R.
Year-on-year first, Q1 of last year and Q1 of this year. To the left, from the left to the right. The pink one, P&R, is getting bigger from THB 300 million-THB 12 billion. It's scattered. Petchem is better significantly because of the spread and the price of the pellets and the feedstock, which is getting better. Refinery is getting better a little bit. Excluding stock gain, it's THB 2.6 billion. If it's net, that's THB 6.4 billion. All in all, it's THB 12 billion. For E&P, last year, THB 10 billion is shrinking to THB 7.9 billion because gas of E&P is not adjusted in line with the crude oil price, especially in March. We also have realized and unrealized hedging loss because hedging loss should be conducted at the minimum price, and this is the unrealized cost, which is quite big. Around $300 million.
Breaking down by category, the biggest one is the margin. It's around THB 20 billion, both for upstream and downstream. For the expenses, some is increasing, like DD&A, the estimates of the decommissioning of E&P. For other income, GC calculated the impairment of gas cracker in the U.S., which we invested for several years. Our partners, they just exit. We recognize some gains. For the impairment here, THB 10 billion is GC America and other related businesses. This is 100% for PTT portion, that's 48%. For FX and derivative, not much different because baht is quite strengthened from and ranging around THB 31-32 against U.S. dollar. For the tax, interest increase because the revenue increase. To the far right, breaking down by business segment, business performance, BAU is THB 21 billion.
Special items, extra item like bond buyback of Thaio il, half of that is THB 935. Business restructuring of MCC, that's in impairment, that's THB 700. Impairment is THB 3 billion. The stock gain, hedging loss, and P&R, excluding PTT trading and FX loss. For the key drivers down here, you would see that gas is getting better for GSP. For E&P, there are some hedging loss. This is the key drivers from each sector Q-on-Q compared to Q4 of last year. Next slide, please. The green and the red, what is different from year-over-year is the special items because we have several sectors Q4 last year. Life science is a hero and they book the extra gain fair value of Lotus, that's THB 8 billion. For the purple on the left it is quite big, this year we don't have that.
We have only the impairment. For the purple one, it's in the negative. P&R is getting better. Others is quite the same or down by a little bit. It's quite in line with the year-on-year. Slide. For the key drivers of gas, natural gas price in the world is getting up. At the same time, the average pool gas price is not that high because of the restructuring of the gas structure from Singapore price to new price as price structure. To the right, our customers, the gas volume is getting better. Majority is the power plants and industry customers in Q1 of this year. Sales volume is larger. GSP feed cost versus petchem prices. Compare between the two links with the gas price. Petchem prices, LDPE, HDPE is getting up in line with the world's trend.
For the feed cost, it is the mixture of the new price structure. To the right, GSP sales volume is going up a little bit by 200 to 300 kilotons for this quarter. Looking at gas EBITDA, it's around THB 13 billion- THB 14 billion, and this Q is at THB 16 billion, which is mainly from the GSP's contribution because of the restructuring of the price structure. For trading business, first of all, it is the hero to ensure that crude oil in the world can be taken into our refineries, and the new rate of our refineries is more than 100% in Q1 up until April. Trading is doing some hard work, especially in the U.S. branches. They secure the crude oil from Brent. For the overall picture, we have three businesses. Trading BU in PTT here.
They have done a lot of activities, and they have the deal done with the Singapore, USA, and London. At head office, when we split in each sector, we see profit. In Q1 there's a little bit in the red, and that's because of the markdown factors because they bought our stock in the U.S., so we have to mark down by THB 2.4 billion. If we sold out in Q1, we would gain and recognize. Without accounting figures, we would have the positive number of about THB 2 billion. Volume wise it's getting better. Gross margin, because of the accounting principle, it is down, but not so much in the end. Financial position. The profit of THB 2.25 billion, part of it is a stock gain, but it is not cash.
We have to spend it on the buying of feedstock on the following day because we have to buy the stock every day. We cannot keep it for long. It's transferred into the refinery every day. The cash, we don't get it from stock gain. Asset is increased by 10% from THB 3.2 billion- THB 3.5 billion. The gray zone here is [GRM] and here is payable. Trade payable. From now on, the cycle of importing of crude oil, it is not 1.5 months, but it would be 2.5-3 months because we will take it from the U.S. because we cut down from the Middle East from 60% - 30%. The blended cycle of the transportation from placing the order from the production is longer. The working capital is higher as well. This is as expected.
Net working capital is higher, asset is higher from the investment in PTT EP and TOP's investment projects, and some from the downstream. The margin call is included in the [EBITDA]. This is cash we have to place in the businesses as a guarantee for PTT Trading so that we can trade in the following day at a higher volume. That's about THB 45 billion. That's in the gray area. Cash, we have more cash from THB 400 billion -THB 485 billion. That's for the reserve that we can get the support from the commercial bank that we have reached out. We have done that until April and May, and we still need to get the support from the banks in the future. I guess every company in the energy chain. For the bank, please give us the support.
For sure, if we take more loans, but our ratio is still strong. Net debt to EBITDA is 1.34 only, so we can take more debts. Net debt to EBITDA is only 0.33. When the country is adapted to the national outlook, we also have the same outlook. For the cash operating is at THB 58 billion. That's from our profit before depreciation. That's cash profit deducting net working capital. Right here, net working capital is missing here because we use it. Changes in assets and liabilities, that THB 89 billion. All in all, we have operating cash at THB 58 billion. We can put it in the pockets for the whole group, PTTEP, TOP. Those are the new projects and it's ongoing projects for other companies. Free cash flow, it's THB 58 billion, which is not much.
Investing, our policy is cash is king, and we don't want to be the last man into the market. With this kind of market condition, we want to be there first, and we are strong enough, and then we take the loans for the whole group, THB 62 billion. First quarter is a THB 45 billion of your fund, that's about THB 30 billion. There's some adjustment, and we have the cash on hand in total THB 485 billion. In this Q2 of this year, we keep communicating with the capital market and financial institutes carefully. We know that there is a fluctuation and uncertainty, and we don't know how it would end.
What we want to communicate with the capital market and financial market is that we are prudent in managing our company, and we are strictly maintaining our corporate governance. On the 28th of April, we just sent our letter to the Stock Exchange of Thailand. What we did, like we established the ICS center, and we have about 50 meetings already up until now in order to update the situation. We can procure our crude as expected. We can run our refinery continuously with efficiency, and our inventory reserves is managed well. We don't have the empty tank because ROIC is essential to ensure return on investment. We would use and spend as necessary reserves. After we refine, we committed the demand, and then we sell it out day by day. We don't want to keep it for speculation in any way.
We ensure pricing policy for refined products during crisis. For financial management, we get into the market quickly. Sometimes we get into the market on behalf of our subsidiaries. We also provide a company loan to our flagship. We have the cash flow flowing effectively. Thanks for all the financial institutes that support us. Number seven is our focus because there are headlines about the hoarding and the violation of the licenses. We want to make sure that every activity is according to the ISO and the self-inspection. We have the committee to ensure the assurance that all our systems are run effectively, and if there are some irregularities, we would be quick enough to fix it. We just do it proactively as well, not that we communicate with the public after the incidents happen.
All the investors would be assured about our good governance. For the outlook, as of now, we are quite reserved because we don't know among all the uncertainties. We don't know at the end of the year if the war situation is getting better. It might be down, the oil price to $80, and the stock gain would be out and released. Only market GRM and product spread would be in place. For the outlook of the energy from the KM this morning, from our senior analyst from PTT Trading, he's an expert who is monitoring the situation 24/7. The sentiment is different from PRISM. For PTT Trading, they are quite excited about the situation that it might take more than a year. What about the price? For me, sooner or later, the price would be coming into its equilibrium.
For the extra gain, it would bring about the loss for sure. This year or next year, we don't know. For the outlook, the interruption of supply from the upstream, Middle East is the upstream of the value chain in many things, not only petrochemical and oil. It's down to fertilizer, pharmaceutical. For the shortage of feedstock, which is from the upstream, shortage would be there for sure. There is the equilibrium of demand and supply. In the end, the products in the energy chain or petchem chain would be in the positive zone. It might not be that much. For the upstream, we still see the positive sign. For downstream, it is strain. For the refinery, in order to be even out, the extra gain from the war, it would be getting into the equilibrium. There is no stock gain.
Market GRM, which is high, crude premium that the CEO has just mentioned about. Diesel spread is high, the crude premium would be high and in line with each other, probably in Q2 and in Q3, getting back into normal. Q4, refinery would be stable enough. Oil retail would be better. For oil, we invested in many infrastructure. For oil, we change our policy of investment. We look forward for the impact. We want to improve it and/or divest it if necessary. Oil retail, it would be better as planned. This is the updates for our outlook.