Thailand's PTT, Asia's fourth-largest oil and gas company by market value, posted a slump in quarterly profit in its core gas operations mainly due to the rising burden of sales at government-set prices.

The struggles in its gas operations could mean state-controlled PTT will have to step up planned asset sales or keep a lid on new investments if it has to halt the underperformance against regional rivals in earnings growth and stock prices.

That may hinder efforts by Southeast Asia's second-biggest economy to secure future energy resources, at a time when domestic gas supplies will be exhausted within the next decade.

The loss at the core earnings level from supplying subsidized natural gas for vehicles (NGV) rose to a record 5 billion baht ($158 million) in the July-September quarter, PTT said on Wednesday.

Operating profit from the gas business fell nearly 13% in the latest quarter to 7.6 billion baht.

While the gas operations have suffered from the impact of subsidies on NGV and liquefied petroleum gas (LPG) for several years, the losses rose in the latest quarter as drivers shifted from costlier oil to gas and as LPG import costs rose.

"Widening losses on fuel subsidies are an overhang issue that will drag down operations of PTT's core gas business," said Suwat Sinsadok, analyst at CIMB Securities.

PTT sells NGV to retail users at 10.5 baht per kg and to taxi drivers at 8.5 baht versus its cost of 15.5-16.5 baht. Third-quarter NGV sales rose 12.5% from a year earlier to 8,660 tons a day.

PTT runs Thailand's gas pipeline monopoly and controls more than 30 petroleum, gas exploration, petrochemical and refinery businesses.

The gas business made up about a fifth of its nine-month 2013 operating profit, while the exploration and production business accounted for 70%.

Profit Decline

PTT reported a net profit of 30.9 billion baht for the quarter ended Sept. 30, down 14% from a year earlier. But the profit beat expectations and more than doubled against the second quarter of 2013, reflecting a recovery in its petrochemical and refinery affiliates and foreign exchange gains.

Still, the weaker profits from the gas business overshadowed the gains from the exploration and production unit and higher contributions from its petrochemical and refinery businesses.

PTT has already flagged it expected to post a record operating loss of 24 billion baht for the full 2013 year in the NGV segment, up from 18 billion baht last year.

The firm's Chief Financial Officer Surong Bulakul told Reuters on Tuesday ahead of the results PTT was in discussion with the government to seek a solution on the fuel subsidies.

"In the short term, the burden from LPG and NGV price subsidies should put pressure on PTT share price performance," Sutthichai Kumworachai, analyst at Maybank Kim Eng Securities, said in a note on Wednesday.

PTT's third-quarter gas sales volume dropped 1.6% due to weak demand from power plants and industrial users as a result of the country's economic slowdown.

Pressure on PTT to slow down some long term investments could rise, after the company scaled back this year's budget because of lower-than-expected economic growth. It also wants to sell non-core assets, like its palm oil business in Indonesia, which may be speeded up.

Shares of PTT, valued at around $28 billion, have fallen 2.2% in the current quarter, underperforming a 1.6% rise in the broader Thai market index and a 3.6% gain in Hong Kong shares of Sinopec.

PTT's net income is expected to rise 7.7% in the next 12 months, versus 9.2% for PetroChina and 9.8% for Sinopec, according to StarMine SmartEstimates.